As filed with the Securities and Exchange Commission on September 13, 2013

Registration No. 333-190815

UNITED STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

RINGCENTRAL, INC.

(Exact name of Registrant as specified in its charter)

Delaware

7372

94-3322844

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

1400 Fashion Island Blvd., 7th Floor,

San Mateo, California 94404

(650) 472-4100

(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)

Vladimir G. Shmunis

Chief
Executive Officer

RingCentral, Inc.

1400 Fashion Island Blvd., 7th Floor,

San Mateo, California 94404

(650) 472-4100

(Name, address, including zip code, and telephone number, including area
code, of agent for service)

Copies to:

Jeffrey D. Saper

Nathaniel P. Gallon

Wilson Sonsini Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto, California 94304

(650) 493-9300

John H. Marlow

Senior Vice President

and General Counsel

RingCentral, Inc.

1400 Fashion Island Blvd., 7th
Floor,

San Mateo, California 94404

(650) 472-4100

Eric C. Jensen

Andrew S. Williamson

Cooley LLP

101 California Street, 5th Floor

San Francisco, California 94111

(415) 693-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after of this Registration Statement becomes
effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

x (Do not check if a
smaller reporting company)

Smaller reporting company

¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of

Securities to be Registered

Amount to beRegistered(1)

Proposed MaximumOffering Price

Per Share

Proposed MaximumAggregate OfferingPrice(2)

Amount ofRegistration

Fee(3)

Class A Common Stock, $0.0001 par value per share

8,625,000

$13.00

$112,125,000

$15,294

(1)

Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes an additional 1,125,000 shares that the underwriters have the option to purchase.

(2)

Estimated solely for purposes of calculating the registration fee.

(3)

The Registrant previously paid $13,640 of this amount in connection with the initial filing of the Registration Statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities
may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.

Subject
to Completion. Dated September 13, 2013.

7,500,000 Shares

Class A Common Stock

This is the initial public offering of Class A common stock of RingCentral, Inc. Prior to this offering, there has been no public market for
our Class A common stock. RingCentral, Inc. is offering 7,420,000 shares of Class A common stock, and the selling stockholders are offering 80,000 shares of Class A common stock. We will not receive any proceeds from the sale of
shares by the selling stockholders. The initial public offering price of our Class A common stock is expected to be between $11.00 and $13.00 per share.

Following this offering, we will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock will
be identical, except with respect to voting and conversion. Each share of Class A common stock will be entitled to one vote per share. Each share of Class B common stock will be entitled to 10 votes per share and will be convertible at any
time into one share of Class A common stock. Outstanding shares of Class B common stock will represent approximately 98.6% of the voting power of our outstanding capital stock following this offering.

We have applied to list our Class A common stock on the New York Stock Exchange under the symbol RNG.

We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting
requirements for so long as we remain an emerging growth company.

Investing in our
Class A common stock involves risks. See Risk Factors beginning on page 10 to read about factors you should consider before buying shares of our Class A common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Through and
including , 2013 (the 25th day after the date of this prospectus), all dealers effecting transactions in these
securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealers obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or
subscription.

You should rely only on the information contained in this prospectus and in any related free writing prospectus prepared by or on behalf of us.
Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with information or to make any representations other than those contained in this prospectus or any related free writing prospectus. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

For investors outside the U.S.: neither we, the selling stockholders nor any of the underwriters have done anything that would permit this offering
or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the U.S. You are required to inform yourselves about and to observe any restrictions relating to this offering and the
distribution of this prospectus.

This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary does not contain all of the
information you should consider before investing in our Class A common stock. You should read this entire prospectus carefully, especially the risks of investing in our Class A common stock discussed under Risk Factors and our
consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. Unless otherwise noted or indicated by the context, the term RingCentral refers to RingCentral, Inc., and
we, us, and our refer to RingCentral and its consolidated subsidiaries.

Overview

We are a leading provider of software-as-a-service, or SaaS, solutions for business communications. We believe that our innovative,
cloud-based approach disrupts the large market for business communications solutions by providing flexible and cost-effective services that support distributed workforces, mobile employees and the proliferation of bring-your-own
communications devices. We enable convenient and effective communications for our customers across all their locations, all their employees, all the time, thus fostering a more productive and dynamic workforce. RingCentral Office, our flagship
service, is a multi-user, enterprise-grade communications solution that enables our customers and their employees to communicate via voice, text and fax, on multiple devices, including smartphones, tablets, PCs and desk phones.

Traditionally, businesses have used on-premise hardware-based communications systems, commonly referred to as private branch exchanges, or PBXs.
These systems generally require specialized and expensive hardware that must be deployed at every business location and are primarily designed for employees working only at that location and using only their desk phones. In addition, these systems
generally require significant upfront investment and ongoing maintenance and support costs. Furthermore, according to Gartners April 2013 report entitled Bring Your Own Device: The Facts and the Future, by 2017, half of employers
will require their employees to supply their own devices for work purposes. We believe that this trend will create additional challenges for businesses using legacy communications solutions.

Our solutions have been developed with a mobile-centric approach and can be configured, managed and used from a smartphone or tablet. We have
designed our user interfaces to be intuitive and easy to use for both administrators and end-users. We believe that we can provide substantial savings to our customers because our services do not require the significant upfront investment in
on-premise infrastructure hardware or ongoing maintenance costs commonly associated with on-premise systems. Our solutions generally use existing broadband connections. We design our solutions to be delivered to our customers with high reliability
and quality of service using our proprietary high-availability and scalable infrastructure.

The market for business communications
solutions is large. According to Infonetics Research, from 2008 through 2012, there were 61 million PBX lines sold in North America. Assuming our current base selling price of approximately $20 per user per month, we believe that the potential
replacement market is approximately $15 billion in North America. We also believe that this estimate significantly understates the potential market opportunity for our cloud-based solutions because a significant number of businesses today have not
historically deployed a business communications system due to functionality limitations, cost and other factors.

We primarily generate
revenues by selling subscriptions for our cloud-based services. We focus on acquiring and retaining our customers and increasing their spending with us through adding

additional users, upselling current customers to premium service editions, and providing additional features and functionality. We market and sell our services directly, through both our website
and inside sales teams, as well as indirectly through a network of over 1,000 sales agents and resellers, including AT&T, which we refer to collectively as resellers. We have a differentiated business model that reduces the time and cost to
purchase, activate and begin using our services. We generally offer free trials to prospective customers, allowing them to evaluate our solutions before making a purchasing decision.

We have a diverse and growing customer base comprised of over 300,000 businesses across a wide range of industries, including advertising,
consulting, finance, healthcare, legal, real estate, retail and technology. To date, we have focused our principal efforts on the market for small and medium-sized businesses, defined by IDC as less than 1,000 employees, in the U.S. and Canada. We
are making investments in an effort to address larger customers. We also believe that there is an additional growth opportunity in international markets.

We have experienced significant growth in recent periods, with total revenues of $50.2 million, $78.9 million and $114.5 million in 2010, 2011 and 2012, respectively, generating year-over-year increases of 57% and
45%, respectively. We have continued to make significant expenditures and investments, including in research and development, brand marketing and channel development, infrastructure and operations, and incurred net losses of $7.3 million, $13.9
million and $35.4 million, in 2010, 2011 and 2012, respectively. For the six months ended June 30, 2012 and 2013, our total revenues were $51.8 million and $73.2 million, respectively, and our net losses were $18.7 million and $23.9 million,
respectively.

Industry Background

Communications systems are critical to any business. In recent years, there have been significant changes in how people work and communicate with customers, co-workers and other third parties. Traditionally,
business personnel worked primarily at a single office, during business hours, and utilized desk phones as their primary communications devices connected through a PBX. With the proliferation of smartphones and tablets that offer much of the
functionality of PCs, combined with the pervasiveness of inexpensive broadband Internet access, businesses are increasingly working around the clock across geographically dispersed locations, and their employees are using a broad array of
communications devices and utilizing text, along with voice and fax, for business communications.

These changes have created new
challenges for business communications. Traditional on-premise systems are generally not designed for workforce mobility, bring-your-own communications device environments, or the use of multiple communication channels, including text.
Today, businesses require flexible, location- and device-agnostic communications solutions that provide users with a single identity across multiple locations and devices.

Fundamental advances in cloud technologies have enabled a new generation of business software to be delivered as a service over the Internet. Today, mission-critical applications such as customer relationship
management, human capital management, enterprise resource planning and information technology, or IT, support are being delivered securely and reliably to businesses through cloud-based platforms. While on-premise systems typically require
significant upfront and ongoing costs, as well as trained and dedicated IT personnel, cloud-based services enable cost-effective and easy delivery of business applications to users regardless of location or access device.

We believe that there is a significant opportunity to leverage the benefits of cloud computing to
provide next-generation, cloud-based business communications solutions that address the new realities of workforce mobility, multi-device environments and multi-channel communications, thereby enabling people to communicate the way they do business.

Our Solutions

Our cloud-based business communications solutions provide a single user identity across multiple locations and devices, including smartphones,
tablets, PCs and desk phones, and allow for communication across multiple channels, including voice, text and fax. Our proprietary solutions enable a more productive and dynamic workforce, and have been architected using industry standards to meet
modern business communications requirements, including workforce mobility, bring-your-own communications device environments and multiple communications channels.

The key benefits of our solutions include:



Location Independence. We seamlessly connect distributed and mobile users, enabling employees to communicate with a single
identity whether working from a central location, a branch office, on the road, or at home.



Device Independence. Our solutions are designed to work with a broad range of devices, including smartphones, tablets, PCs and desk phones,
enabling businesses to successfully implement a bring-your-own communications device strategy.



Instant Activation; Easy Account Management. Our solutions are designed for rapid deployment and ease of management. Our
simple and intuitive graphical user interfaces allow administrators and users to set up and manage their business communications system with little or no IT expertise, training or dedicated staffing.



Scalability. Our cloud-based solutions scale easily and efficiently with the growth of our customers. Customers can add
users, regardless of their location, without having to purchase additional infrastructure hardware or software upgrades.



Lower Cost of Ownership. We believe that our customers experience significantly lower cost of ownership compared to legacy
on-premise systems. Using our cloud-based solutions, our customers can avoid the significant upfront costs of infrastructure hardware, software, ongoing maintenance and upgrade costs, and the need for dedicated and trained IT personnel.



Seamless and Intuitive Integration with Other Cloud-Based Applications. Our platform provides seamless and intuitive
integration with multiple popular cloud-based business applications such as salesforce.com, Google Drive, Box and Dropbox.

Our Competitive Strengths

Our competitive strengths include:



Proprietary Core Technology Platform.We have developed our core multi-tenant, cloud-based, high-availability,
scalable platform in-house over several years using industry standards. Our platform incorporates our communications and messaging services, delivery and billing infrastructure and open application programming interfaces, or APIs, for integration
with third parties.

Mobile-Centric Approach. Our platform was developed with a mobile-centric approach and can be provisioned, configured,
managed and used from a smartphone or tablet as well as from PCs and the Web.



Rapid Innovation and Release Cycle. We strive to continuously innovate in an effort to regularly release new features and
functionality to our customers.



Quality and Reliability of Service. Our platform employs a number of technologies and tools to provide the quality of
service that our customers expect while using their existing broadband connections.

Focus on Larger RingCentral Office Customers. We believe that these larger customers are more likely to have employees
working in distributed locations or multiple offices and are more likely to require additional services, purchase premium service editions, have higher retention rates and enter into longer-term contracts.



Continue to Innovate. We intend to continue to invest in development efforts to introduce new features and functionality to
our customers.



Grow Revenues from Existing Customers.We intend to grow our revenues from our existing customers as they add new
users and as we provide them with new features and functionality.



Expand Our Distribution Channels. Our indirect sales channel currently consists of a network of over 1,000 resellers,
including AT&T. We intend to continue to foster these relationships and to develop additional relationships with other resellers.



Scale Internationally. To date, we have derived most of our total revenues from the North American market. We believe that
there is an additional growth opportunity for our cloud-based business communications solutions in international markets.

Risks Associated with Our Business

Investing in our common stock involves substantial risks,
including, but not limited to, the following:



Significant Losses. We have incurred significant losses in the past and anticipate continuing to incur losses for the
foreseeable future, and we may therefore not be able to achieve or sustain profitability in the future.



Limited Operating History. Our limited operating history makes it difficult to evaluate our current business and future
prospects, which may increase the risk of your investment.



Reliance on Third Parties. We rely on third parties for all of the network connectivity that is needed to deliver our
services. We also lease third-party co-location facilities to house our data centers. We use purchased or leased hardware and licensed software from third parties, as well as rely on third parties for some software development, quality assurance,
operations and customer support.

Interruptions of Services. Interruptions in our services, whether caused by us or third parties, could harm our reputation,
result in significant costs to us and impair our ability to sell our services.

If we are unable to adequately address
these and other risks we face, our business, financial condition, results of operations, and prospects may be materially and adversely affected. In addition, there are additional risks related to an investment in our common stock.

You should carefully read Risk Factors beginning on page 10 for an explanation of the foregoing risks before investing in our common
stock.

Corporate Background and Information

We were incorporated in California in February 1999 and plan to reincorporate in Delaware immediately prior to or upon the
closing of this offering. Our principal executive offices are located at 1400 Fashion Island Blvd., 7th Floor, San Mateo, California 94404. The phone number of our principal executive offices is (650) 472-4100, and our main corporate website is www.ringcentral.com. The information on, or that can be accessed
through, our website is not part of this prospectus.

We have rights to a number of marks used in this prospectus
that are important to our business, including, without limitation, RingCentral, RingCentral Office, RingCentral Professional, RingCentral Fax and Plug&Ring. This prospectus also contains trademarks and trade names of other businesses that are
the property of their respective holders. We have omitted the ® and  designations, as applicable, for the trademarks
we name in this prospectus.

Total Class A and Class B common stock to be outstanding after this offering

60,748,648 shares

Option to purchase additional shares of Class A common stock from us

1,125,000
shares

Use of proceeds

The principal purposes of this offering are to increase our financial flexibility, increase our visibility in the marketplace and create a public
market for our Class A common stock. We intend to use the net proceeds that we receive from this offering for working capital or other general corporate purposes, including additional marketing expenditures, the expansion of our sales
organization, international expansion and further development of our solutions. We may use a portion of the net proceeds to repay in part or in full the outstanding principal and accrued interest on our term loans with our two lenders, the
outstanding principal of which totaled $20.0 million in aggregate as of June 30, 2013 and the additional $20.8 million that we borrowed in August 2013 under our amended credit agreements. We also may use a portion of the net proceeds for
capital expenditures for expansion of our network infrastructure as we grow our customer base in the U.S. and internationally. In addition, we may use a portion of the proceeds for acquisitions of complementary businesses, technologies or other
assets. We will not receive any of the proceeds from the sale of shares to be offered by the selling stockholders. See Use of Proceeds beginning on page 48.

Concentration of ownership

Upon completion of this offering, our directors, executive officers and 5% stockholders and their affiliates will beneficially own, in the aggregate, approximately 80.2% of the voting power
of our outstanding capital stock.

The total number of shares of our Class A and Class B common stock to be outstanding after this offering used in this prospectus is based on no shares of our Class A common stock and 53,248,648 shares of
our Class B common stock (including preferred stock on an as converted basis) outstanding as of June 30, 2013, excluding:



3,737,232 shares of Class B common stock issuable upon the exercise of outstanding options as of June 30, 2013 granted pursuant to our 2003 Equity Incentive Plan
at a weighted-average exercise price of $0.95 per share;



6,005,875 shares of Class B common stock issuable upon the exercise of outstanding options as of June 30, 2013 granted pursuant to our 2010 Equity Incentive Plan
at a weighted-average exercise price of $6.22 per share;



6,200,000 additional shares of Class A common stock, subject to increase on an annual basis, reserved for future issuance under our 2013 Equity Incentive
Plan, which will become effective in connection with this offering;



1,250,000 additional shares of Class A common stock, subject to increase on an annual basis, reserved for future issuance under our 2013 Employee Stock Purchase
Plan, which will become effective in connection with this offering; and



370,159 shares of Class B common stock issuable upon exercise of outstanding warrants with a weighted-average exercise price of $3.15 per share.

our reincorporation in Delaware immediately prior to or upon the completion of this offering;



the reclassification of all of our common stock immediately prior to completion of this offering into an equivalent number of shares of our Class B common stock
and the authorization of our Class A common stock;



that our amended and restated certificate of incorporation, which we will file in connection with the completion of this offering, is in effect;



the automatic conversion of all shares of our outstanding preferred stock into an aggregate of 30,368,527 shares of Class B common stock immediately prior to the
completion of this offering and the automatic conversion of warrants to purchase 110,000 shares of our common stock and 260,159 shares of our preferred stock into warrants to purchase 370,159 shares of our Class B common stock upon completion of
this offering; and



no exercise of the underwriters option to purchase up to an additional 1,125,000 shares of our Class A common stock from us in this offering.

You should read the summary consolidated financial data set forth below in conjunction with the section titled Managements Discussion
and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this prospectus.

We have derived the following summary consolidated statements of operations data for the years ended December 31, 2010, 2011 and 2012 from our audited consolidated financial statements included elsewhere in this
prospectus. We have derived the summary consolidated statements of operations data for the six months ended June 30, 2012 and 2013 and the summary consolidated balance sheet data as of June 30, 2013 from our unaudited interim consolidated
financial statements included elsewhere in this prospectus. Our unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, reflect all
adjustments, consisting only of normal recurring adjustments, that are necessary for the fair statement of our unaudited interim consolidated financial statements. Our historical results are not necessarily indicative of the results that may be
expected in the future, and the results for the six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the full year ending December 31, 2013 or any other period.

Year Ended December 31,

Six Months EndedJune 30,

2010

2011

2012

2012

2013

(unaudited)

(unaudited)

(in thousands, except per share amounts)

Consolidated Statement of Operations Data:

Revenues:

Services

$

46,385

$

71,915

$

105,693

$

47,699

$

66,744

Product

3,837

6,962

8,833

4,115

6,485

Total revenues

50,222

78,877

114,526

51,814

73,229

Cost of revenues:

Services(1)

17,915

26,475

36,215

17,119

22,098

Product

4,537

6,523

8,688

4,182

6,301

Total cost of revenues

22,452

32,998

44,903

21,301

28,399

Gross profit

27,770

45,879

69,623

30,513

44,830

Operating expenses:

Research and development(1)

7,208

12,199

24,450

11,037

16,110

Sales and marketing(1)

22,922

34,550

54,566

25,844

33,466

General and administrative(1)

4,934

12,969

24,434

12,079

17,781

Total operating expenses

35,064

59,718

103,450

48,960

67,357

Loss from operations

(7,294

)

(13,839

)

(33,827

)

(18,447

)

(22,527

)

Other income (expense), net:

Interest expense

(184

)

(158

)

(1,503

)

(230

)

(1,227

)

Other income (expense), net

172

109

32

(28

)

(247

)

Other income (expense), net

(12

)

(49

)

(1,471

)

(258

)

(1,474

)

Loss before provision (benefit) for income taxes

(7,306

)

(13,888

)

(35,298

)

(18,705

)

(24,001

)

Provision (benefit) for income taxes

1

15

92

33

(120

)

Net loss

$

(7,307

)

$

(13,903

)

$

(35,390

)

$

(18,738

)

(23,881

)

Net loss per common share:

Basic and diluted

$

(0.35

)

$

(0.64

)

$

(1.58

)

$

(0.84

)

$

(1.05

)

Weighted-average number of shares used in computing net loss per share:

Share-based compensation expense is included in our results of operations as follows (in thousands):

Year Ended December 31,

Six Months EndedJune 30,

2010

2011

2012

2012

2013

(unaudited)

(unaudited)

Cost of services revenues

$

58

$

141

$

235

$

109

$

168

Research and development

111

260

837

313

517

Sales and marketing

340

297

651

330

404

General and administrative

311

490

1,379

463

1,247

Total share-based compensation expense

$

820

$

1,188

$

3,102

$

1,215

$

2,336

Consolidated Balance Sheet Data:

As ofJune 30, 2013

Actual

Pro Forma(1)

Pro FormaAs Adjusted(2)

(in thousands)

Cash and cash equivalents

$

19,366

$

19,366

$

98,826

Working capital (deficit)

(22,776

)

(22,776

)

53,976

Total assets

48,500

48,500

126,490

Deferred revenue

13,707

13,707

13,707

Debt, capital lease obligations and preferred stock warrant liability

20,991

20,726

20,726

Convertible preferred stock

74,020

-

-

Total shareholders equity (deficit)

(20,725

)

(20,460

)

58,768

(1)

The pro forma column reflects (i) the automatic conversion of all outstanding shares of preferred stock and common stock into an aggregate of 53,298,648 shares of
Class B common stock immediately prior to the completion of this offering and (ii) the conversion of all warrants to purchase preferred stock and common stock into warrants to purchase an aggregate of 370,159 shares of Class B common
stock, as if such conversions had occurred on June 30, 2013.

(2)

The pro forma as adjusted column gives effect to the pro forma adjustments set forth in footnote 1 above and the sale by us of shares of Class A common stock in this
offering, at an assumed initial public offering price of $12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by us, and the sale of shares of Class A common stock by the selling stockholders.

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the following risk factors and all
other information contained in this prospectus, including our consolidated financial statements and the related notes, before making a decision to invest in our Class A common stock. The risks and uncertainties described below are not the only
ones we face and include risks we consider material of which we are currently aware. If any of the following risks materialize, our business, financial condition, results of operations, and prospects could be materially harmed. In that event, the
trading price of our Class A common stock could decline, and you could lose all or part of your investment.

Risks Related to
Our Business and Our Industry

We have incurred significant losses and negative cash flows in the past and anticipate continuing to incur
losses and negative cash flows for the foreseeable future, and we may therefore not be able to achieve or sustain profitability in the future.

We have incurred substantial net losses since our inception, including net losses of $7.3 million for fiscal 2010, $13.9 million for fiscal 2011, $35.4 million for fiscal 2012 and $23.9 million for the six months
ended June 30, 2013, and had an accumulated deficit of $107.5 million as of June 30, 2013. Over the past year, we have spent considerable amounts of time and money to develop new business communications solutions and enhanced versions of our
existing business communications solutions to position us for future growth. Additionally, we have incurred substantial losses and expended significant resources upfront to market, promote and sell our solutions and expect to continue to do so in
the future. We also expect to continue to invest for future growth, including for advertising, customer acquisition, technology infrastructure, storage capacity, services development and international expansion. In addition, as a public company, we
will incur significant accounting, legal and other expenses that we did not incur as a private company.

As a result of our increased
expenditures, we will have negative operating cash flows for the foreseeable future and will have to generate and sustain increased revenues to achieve future profitability. Achieving profitability will require us to increase revenues, manage our
cost structure and avoid significant liabilities. Revenue growth may slow, revenues may decline or we may incur significant losses in the future for a number of possible reasons, including general macroeconomic conditions, increasing competition
(including competitive pricing pressures), a decrease in the growth of the markets in which we compete, or if we fail for any reason to continue to capitalize on growth opportunities. Additionally, we may encounter unforeseen operating expenses,
difficulties, complications, delays, service delivery and quality problems and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future
periods, our financial performance will be harmed and our stock price could be volatile or decline.

Our limited operating history makes it
difficult to evaluate our current business and future prospects, which may increase the risk of your investment.

Although we
were incorporated in 1999, we did not formally introduce RingCentral Office, our current flagship service, until 2009. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in
rapidly changing markets. If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially
from our expectations, and our business could suffer. Any success that we may experience in the future will depend, in large part, on our ability to, among other things:



retain and expand our customer base;



increase revenues from existing customers as they add users and, in the future, purchase additional functionalities and premium service editions;

maintain and enhance our third-party data center hosting facilities to minimize interruptions in the use of our services; and



hire, integrate, and retain professional and technical talent.

Our quarterly and annual results of operations have fluctuated in the past and may continue to do so in the future. As a result, we may fail to meet or to exceed the expectations of research analysts or
investors, which could cause our stock price to fluctuate.

Our quarterly and annual results of operations have varied
historically from period to period, and we expect that they will continue to fluctuate due to a variety of factors, many of which are outside of our control, including:

variability and unpredictability could result in our failure to meet our internal operating plan or the expectations of securities analysts or investors for any period, which could cause our
stock price to decline. In addition, a significant percentage of our operating expenses is fixed in nature and is based on forecasted revenues trends. Accordingly, in the event of revenue shortfalls, we may not be able to mitigate the negative
impact on net income (loss) and margins in the short term. If we fail to meet or exceed the expectations of research analysts or investors, the market price of our shares could fall substantially, and we could face costly lawsuits, including
securities class-action suits.

To deliver our services, we rely on third parties for all of our network connectivity and co-location facilities.

We currently use the infrastructure of third-party network service providers, in particular, the services of Level 3
Communications, Inc. and Bandwidth.com, Inc., to deliver all of our services over their networks rather than deploying our own networks. Our service providers provide access to their Internet protocol, or IP, networks, and public switched telephone
networks, or PSTN, and provide call termination and origination services, including 911 emergency calling in the U.S. and equivalent services in Canada and the United Kingdom, and local number portability for our customers. We expect that we will
continue to rely heavily on third-party network service providers to provide these services for the foreseeable future. Historically, our reliance on third-party networks has reduced our operating flexibility and ability to make timely service
changes, and we expect that this will continue for the foreseeable future. If any of these network service providers stop providing us with access to their infrastructure, fail to provide these services to us on a cost-effective basis, cease
operations, or otherwise terminate these services, the delay caused by qualifying and switching to another third-party network service provider, if one is available, could have a material adverse effect on our business and results of operations.

In addition, we currently use and may in the future use third-party service providers to deliver certain features of our services. For
example, we rely on Free Conference Call Global, LLC for conference calling features. If any of these service providers elects to stop providing us with access to their services, fails to provide these services to us on a cost-effective basis,
ceases operations, or otherwise terminates these services, the delay caused by qualifying and switching to another third-party service provider, if one is available, or building a proprietary replacement solution could have a material adverse effect
on our business and results of operations.

Finally, if problems occur with any of these third-party network or service providers, it
may cause errors or poor call quality in our service, and we could encounter difficulty identifying the source of the problem. The occurrence of errors or poor call quality in our service, whether caused by our systems or a third-party network or
service provider, may result in the loss of our existing customers, delay or loss of market acceptance of our services, termination of our relationships and agreements with our resellers, and may seriously harm our business and results of
operations.

Interruptions or delays in service from our third-party data center hosting facilities and co-location facilities could impair the
delivery of our services and harm our business.

We currently serve our North American customers from two data center hosting
facilities located in northern California and northern Virginia, where we lease space from Equinix, Inc. In the near future, we expect to serve customers in Europe from two third-party data center hosting facilities in Amsterdam, the Netherlands,
and Zurich, Switzerland. In addition, our wholly owned subsidiary, RCLEC, Inc., uses two third-party co-location facilities to provide us with network services, and we expect RCLEC to use additional third-party co-location facilities in the future.
Any damage to, or failure of, these facilities, the communications network providers with whom we or they contract, or with the systems by which our communications providers allocate capacity among their customers, including us, could result in
interruptions in our service. Additionally, in connection with the expansion or

consolidation of our existing data center facilities, we may move or transfer our data and our customers data to other data centers. Despite precautions that we take during this process,
any unsuccessful data transfers may impair or cause disruptions in the delivery of our service. Interruptions in our service may reduce our revenues, may require us to issue credits or pay penalties, subject us to claims and litigation, cause
customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers. Because our ability to attract and retain customers depends on our ability to provide customers with a highly reliable
service, even minor interruptions in our service could harm our brand and reputation and have a material adverse effect on our business.

As part of our current disaster recovery arrangements, our North American infrastructure and all of our North American customers data is
currently replicated in near real-time at our two data center facilities in the U.S., and our European production environment and all of our United Kingdom and other European customers data will be replicated in near real-time at our two
European data center facilities. We do not control the operation of these facilities or of RCLECs co-location facilities, and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications
failures, and similar events. They may also be subject to break-ins, sabotage, acts of vandalism, and similar misconduct. Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of terrorism or other
unanticipated problems at these facilities could result in lengthy interruptions in our service. Even with the disaster recovery arrangements in place, our service could be interrupted.

We may also be required to transfer our servers to new data center facilities in the event that we are unable to renew our leases on acceptable
terms, if at all, or the owners of the facilities decide to close their facilities, and we may incur significant costs and possible service interruption in connection with doing so. In addition, any financial difficulties, such as bankruptcy or
foreclosure, faced by our third-party data center operators, or any of the service providers with which we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, if our data
centers are unable to keep up with our increasing needs for capacity, our ability to grow our business could be materially and adversely impacted.

Failures in Internet infrastructure or interference with broadband access could cause current or potential users to believe that our systems are unreliable,
leading our customers to switch to our competitors or to avoid using our services.

Unlike traditional communications services,
our services depend on our customers high-speed broadband access to the Internet, usually provided through a cable or digital subscriber line, or DSL, connection. Increasing numbers of users and increasing bandwidth requirements may degrade
the performance of our services and applications due to capacity constraints and other Internet infrastructure limitations. As our customer base grows and their usage of communications capacity increases, we will be required to make additional
investments in network capacity to maintain adequate data transmission speeds, the availability of which may be limited, or the cost of which may be on terms unacceptable to us. If adequate capacity is not available to us as our customers
usage increases, our network may be unable to achieve or maintain sufficiently high data transmission capacity, reliability or performance. In addition, if Internet service providers and other third parties providing Internet services have outages
or deteriorations in their quality of service, our customers will not have access to our services or may experience a decrease in the quality of our services. Furthermore, as the rate of adoption of new technologies increases, the networks on which
our services and applications rely may not be able to sufficiently adapt to the increased demand for these services, including ours. Frequent or persistent interruptions could cause current or potential users to believe that our systems are
unreliable, leading them to switch to our competitors or to avoid our services, and could permanently harm our reputation and brands.

In addition, users who access our services and applications through mobile devices, such as smartphones and tablets, must have a high-speed
connection, such as Wi-Fi, 3G or 4G, to use our

services and applications. Currently, this access is provided by companies that have significant and increasing market power in the broadband and Internet access marketplace, including incumbent
phone companies, cable companies and wireless companies. Some of these providers offer products and services that directly compete with our own offerings, which can potentially give them a competitive advantage. Also, these providers could take
measures that degrade, disrupt or increase the cost of user access to third-party services, including our services, by restricting or prohibiting the use of their infrastructure to support or facilitate third-party services or by charging increased
fees to third parties or the users of third-party services, any of which would make our services less attractive to users, and reduce our revenues.

In the U.S., there is some uncertainty regarding whether suppliers of broadband Internet access have a legal obligation to allow their customers to access and use our services without interference. In December
2010, the Federal Communications Commission, or FCC, adopted net neutrality rules that make it more difficult for broadband Internet access service providers to block, degrade or discriminate against our services. These rules apply to wired
broadband Internet providers, but not all of the rules apply to wireless broadband service. We cannot assure you that current net neutrality rules will not change in the future. There have been recent challenges to the FCC net neutrality rules,
including an action brought against the FCC in the U.S. Court of Appeals for the District of Columbia Circuit. Any instances of broadband interference could result in a loss of existing users and increased costs, which could impair our ability to
attract new users, and materially and adversely affect our business and opportunities for growth.

Most of our customers may terminate their
subscriptions for our service at any time without penalty, and increased customer turnover, or costs we incur to retain our customers and encourage them to add users and, in the future, to purchase additional functionalities and premium service
editions, could materially and adversely affect our financial performance.

Our customers generally do not have long-term
contracts with us and these customers may terminate their subscription for our service at any time without penalty or early termination charges. We cannot accurately predict the rate of customer terminations or average monthly service cancellations
or failures to renew, which we refer to as turnover. Our customers with subscription agreements have no obligation to renew their subscriptions for our service after the expiration of their initial subscription period, which is typically between 1
and 36 months. In the event that these customers do renew their subscriptions, they may choose to renew for fewer users, shorter contract lengths, or for a less expensive service plan or edition. We cannot predict the renewal rates for customers
that have entered into subscription contracts with us.

Customer turnover, as well as reductions in the number of users for which a
customer subscribes, each have a significant impact on our results of operations, as does the cost we incur in our efforts to retain our customers and encourage them to upgrade their services and increase their number of users. Our turnover rate
could increase in the future if customers are not satisfied with our service, the value proposition of our services or our ability to otherwise meet their needs and expectations. Turnover and reductions in the number of users for whom a customer
subscribes may also increase due to factors beyond our control, including the failure or unwillingness of customers to pay their monthly subscription fees due to financial constraints and the impact of a slowing economy. Because of turnover and
reductions in the number of users for whom a customer subscribes, we have to acquire new customers, or acquire new users within our existing customer base, on an ongoing basis simply to maintain our existing level of customers and revenues. If a
significant number of customers terminate, reduce or fail to renew their subscriptions, we may be required to incur significantly higher marketing expenditures than we currently anticipate in order to increase the number of new customers or to
upsell existing customers, and such additional marketing expenditures could harm our business and results of operations.

Our future success also depends in part on our ability to sell additional subscriptions and additional
functionalities to our current customers. This may also require increasingly sophisticated and more costly sales efforts and a longer sales cycle. Any increase in the costs necessary to upgrade, expand and retain existing customers could materially
and adversely affect our financial performance. If our efforts to convince customers to add users and, in the future, to purchase additional functionalities are not successful, our business may suffer. In addition, such increased costs could cause
us to increase our subscription rates, which could increase our turnover rate.

If we are unable to attract new customers to our services on a
cost-effective basis, our business will be materially and adversely affected.

In order to grow our business, we must continue to
attract new customers and expand the number of users in our existing customer base on a cost-effective basis. We use and periodically adjust the mix of advertising and marketing programs to promote our services. Significant increases in the pricing
of one or more of our advertising channels would increase our advertising costs or cause us to choose less expensive and perhaps less effective channels to promote our services. As we add to or change the mix of our advertising and marketing
strategies, we may need to expand into channels with significantly higher costs than our current programs, which could materially and adversely affect our results of operations. We will incur advertising and marketing expenses in advance of when we
anticipate recognizing any revenues generated by such expenses, and we may fail to otherwise experience an increase in revenues or brand awareness as a result of such expenditures. We have made in the past, and may make in the future, significant
expenditures and investments in new advertising campaigns, and we cannot assure you that any such investments will lead to the cost-effective acquisition of additional customers. If we are unable to maintain effective advertising programs, our
ability to attract new customers could be materially and adversely affected, our advertising and marketing expenses could increase substantially, and our results of operations may suffer.

Some of our potential customers learn about us through leading search engines, such as Google, Yahoo! and Bing. While we employ search engine
optimization and search engine marketing strategies, our ability to maintain and increase the number of visitors directed to our website is not entirely within our control. If search engine companies modify their search algorithms in a manner that
reduces the prominence of our listing, or if our competitors search engine optimization efforts are more successful than ours, fewer potential customers may click through to our website. In addition, the cost of purchased listings has
increased in the past and may increase in the future. A decrease in website traffic or an increase in search costs could materially and adversely affect our customer acquisition efforts and our results of operations.

We market our products and services principally to small and medium-sized businesses, which may have fewer financial resources to weather an economic
downturn.

We market our products and services principally to small and medium-sized businesses. These customers may be
materially and adversely affected by economic downturns to a greater extent than larger, more established businesses. These businesses typically have more limited financial resources, including capital-borrowing capacity, than larger entities.
Because the vast majority of our customers pay for our services through credit and debit cards, weakness in certain segments of the credit markets and in the U.S. and global economies has resulted in and may in the future result in increased numbers
of rejected credit and debit card payments, which could materially affect our business by increasing customer cancellations and impacting our ability to engage new customers. If small and medium-sized businesses experience financial hardship as a
result of a weak economy, industry consolidation or the overall demand for our services could be materially and adversely affected.

We face significant risks in our strategy to target medium-sized and larger businesses for sales of our services
and, if we do not manage these efforts effectively, our business and results of operations could be materially and adversely affected.

We currently derive only a small portion of our revenues from sales from medium-sized businesses. As we target more of our sales efforts to medium-sized and larger businesses, we expect to incur higher costs and
longer sales cycles and we may be less effective at predicting when we will complete these sales. In this market segment, the decision to purchase our services may require the approval of more technical personnel and management levels within a
potential customers organization than we have historically encountered, and if so, these types of sales would require us to invest more time educating these potential customers about the benefits of our services. In addition, larger customers
may demand more features, integration services and customization. Also, we have only limited experience in developing and managing sales channels and distribution arrangements for larger businesses. As a result of these factors, these sales
opportunities may require us to devote greater research and development resources and sales, support and professional services resources to individual customers, resulting in increased costs and would likely lengthen our typical sales cycle, which
could strain our limited sales and professional services resources. Moreover, these larger transactions may require us to delay recognizing the associated revenues we derive from these customers until any technical or implementation requirements
have been met. Furthermore, because we have limited experience selling to larger businesses, our investment in marketing our services to these potential customers may not be successful, which could materially and adversely affect our results of
operations and our overall ability to grow our customer base. Following sales to medium-sized or larger customers, we may experience fewer opportunities to expand these customers user base or sell them additional functionalities, or experience
increased subscription terminations as compared to our experience with smaller businesses, any of which could materially and adversely impact our results of operations.

Our future success depends on our continued ability to establish and maintain a network of channel relationships, and we expect
that we will need to maintain and expand our network as we expand into international markets. An increasing portion of our revenues is derived from our network of over 1,000 sales agents and resellers, including AT&T, which we refer to
collectively as resellers, many of which sell or may in the future decide to sell their own services or services from other cloud-based business communications providers. We generally do not have long-term contracts with these resellers, and the
loss of or reduction in sales through these third parties could materially reduce our revenues. Our competitors may in some cases be effective in causing our resellers or potential resellers to favor their services or prevent or reduce sales of our
services. If we fail to maintain relationships with our resellers, fail to develop relationships with new resellers in new markets or expand the number of resellers in our network in existing markets, or if we fail to manage, train, or provide
appropriate incentives to our existing resellers, or if our resellers are not successful in their sales efforts, sales of our services may decrease and our results of operations would suffer.

Recruiting and retaining qualified resellers in our network and training them in our technology and service offerings requires significant time and
resources. To develop and expand our indirect sales channels, we must continue to scale and improve our processes and procedures to support these channels, including investment in systems and training. Many resellers may not be willing to invest the
time and resources required to train their staff to effectively market our services.

Support for smartphones and tablets are an integral part of our solutions. If we are unable to develop robust
mobile applications that operate on mobile platforms that our customers use, our business and results of operations could be materially and adversely affected.

Our solutions allow our customers to use and manage our cloud-based business communications solution on smart devices. As new smart devices and operating systems are released, we may encounter difficulties
supporting these devices and services, and we may need to devote significant resources to the creation, support, and maintenance of our mobile applications. In addition, if we experience difficulties in the future integrating our mobile applications
into smart devices or if problems arise with our relationships with providers of mobile operating systems, such as those of Apple Inc. or Google Inc., our future growth and our results of operations could suffer.

We face intense competition in our markets and may lack sufficient financial or other resources to compete successfully.

The cloud-based business communications industry is competitive, and we expect it to become increasingly competitive in the future. We face intense
competition from other providers of business communications systems and solutions. Our competitors include traditional on-premise, hardware business communications providers such as Alcatel-Lucent, S.A., Avaya Inc., Cisco Systems, Inc., Mitel
Networks Corporation, ShoreTel, Inc., Siemens Enterprise Networks, LLC and their resellers; and companies such as Microsoft Corporation and Broadsoft, Inc. that generally license their software, and their resellers. In addition, certain of our
resellers are also our competitors. For example, AT&T serves as one of our resellers but is also a competitor for business communications. All of these companies may now or in the future also host their solutions through the cloud. We also face
competition from other cloud companies such as j2 Global, Inc. and 8x8, Inc., as well as from established communications providers, such as AT&T Inc., Verizon Communications Inc. and Comcast Corporation, that resell on-premise hardware, software
and hosted solutions. We may also face competition from other large Internet companies, such as Google Inc., Yahoo! Inc. and Amazon.com, Inc., any of which might launch its own cloud-based business communications services or acquire other
cloud-based business communications companies in the future.

Many of our current and potential competitors have longer operating
histories, significantly greater resources and name recognition, more diversified service offerings and larger customer bases than we have. As a result, these competitors may have greater credibility with our existing and potential customers and may
be better able to withstand an extended period of downward pricing pressure. In addition, certain of our competitors have partnered with, or been acquired by, and may in the future partner with or acquire, other competitors to offer services,
leveraging their collective competitive positions, which makes it more difficult to compete with them and could materially and adversely affect our results of operations. They also may be able to adopt more aggressive pricing policies and devote
greater resources to the development, promotion and sale of their services than we can to ours. Some of these service providers have in the past and may choose in the future to sacrifice revenues in order to gain market share by offering their
services at lower prices or for free. Our competitors may also offer bundled service arrangements offering a more complete service offering, despite the technical merits or advantages of our services. Competition could force us to decrease our
prices, slow our growth, increase our customer turnover, reduce our sales or decrease our market share. The adverse impact of a shortfall in our revenues may be magnified if we are unable to adjust spending adequately to compensate for such
shortfall.

If we are unable to develop, license or acquire new services or applications on a timely and cost-effective basis, our business,
financial condition, and results of operations may be materially and adversely affected.

The cloud-based business communications
industry is an emerging market that is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced services, and

continuing and rapid technological advancement. We cannot predict the effect of technological changes on our business. To compete successfully in this emerging market, we must anticipate and
adapt to technological changes and evolving industry standards, and continue to design, develop, manufacture and sell new and enhanced services that provide increasingly higher levels of performance and reliability at lower cost. Currently, we
derive a majority of our revenues from subscriptions to RingCentral Office, and we expect this will continue for the foreseeable future. However, our future success will also depend on our ability to introduce and sell new services, features and
functionality that enhance or are beyond the voice, fax and text communications services we currently offer, as well as to improve usability and support and increase customer satisfaction. Our failure to develop solutions that satisfy customer
preferences in a timely and cost-effective manner may harm our ability to renew our subscriptions with existing customers and create or increase demand for our services, and may materially and adversely impact our results of operations.

The introduction of new services by competitors or the development of entirely new technologies to replace existing offerings could make our
solutions obsolete or adversely affect our business and results of operations. Announcements of future releases and new services and technologies by our competitors or us could cause customers to defer purchases of our existing services, which also
could have a material adverse effect on our business, financial condition or results of operations. We may experience difficulties with software development, operations, design or marketing that could delay or prevent our development, introduction
or implementation of new or enhanced services and applications. We have in the past experienced delays in the planned release dates of new features and upgrades, and have discovered defects in new services and applications after their introduction.
We cannot assure you that new features or upgrades will be released according to schedule, or that, when released, they will not contain defects. Either of these situations could result in adverse publicity, loss of revenues, delay in market
acceptance or claims by customers brought against us, all of which could harm our reputation, business, results of operations, and financial condition. Moreover, the development of new or enhanced services or applications may require substantial
investment, and we must continue to invest a significant amount of resources in our research and development efforts to develop these services and applications to remain competitive. We do not know whether these investments will be successful. If
customers do not widely adopt any new or enhanced services and applications, we may not be able to realize a return on our investment. If we are unable to develop, license, or acquire new or enhanced services and applications on a timely and
cost-effective basis, or if such new or enhanced services and applications do not achieve market acceptance, our business, financial condition, and results of operations may be materially and adversely affected.

A security breach could delay or interrupt service to our customers, harm our reputation, or subject us to significant liability.

Our operations depend on our ability to protect our network from interruption by damage from unauthorized entry, computer viruses or other events
beyond our control. In the past, we may have been subject to denial or disruption of service, or DDOS, attacks by hackers intent on bringing down our services, and we may be subject to DDOS attacks in the future. We cannot assure you that our backup
systems, regular data backups, security protocols and other procedures are currently in place, or that may be in place in the future, will be adequate to prevent significant damage, system failure or data loss. Also, our services are web-based, and
the amount of data we store for our users on our servers has been increasing as our business has grown. Despite the implementation of security measures, our infrastructure may be vulnerable to hackers, computer viruses, worms, other malicious
software programs or similar disruptive problems caused by our customers, employees, consultants or other Internet users who attempt to invade public and private data networks. Further, in some cases we do not have in place disaster recovery
facilities for certain ancillary services, such as email delivery of messages. Currently, nearly all of our customers authorize us to bill their credit or debit card accounts directly for all transaction fees that we charge. We rely on encryption
and authentication

technology to ensure secure transmission of confidential information, including customer credit and debit card numbers. Advances in computer capabilities, new discoveries in the field of
cryptography or other developments may result in a compromise or breach of the technology we use to protect transaction data.

Additionally, third parties may have attempted in the past, and may attempt in the future, to fraudulently induce domestic and international
employees, consultants or customers into disclosing sensitive information, such as user names, passwords or customer proprietary network information, or CPNI, or other information in order to gain access to our customers data or to our data.
CPNI includes information such as the phone numbers called by a consumer, the frequency, duration, and timing of such calls, and any services purchased by the consumer, such as call waiting, call forwarding, and caller ID, in addition to other
information that may appear on a consumers bill. Third parties may also attempt to fraudulently induce employees, consultants or customers into disclosing sensitive information regarding our intellectual property and other confidential
business information, or our information technology systems. In addition, because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may
be unable to anticipate these techniques or to implement adequate preventative measures. Any system failure or security breach that causes interruptions or data loss in our operations or in the computer systems of our customers or leads to the
misappropriation of our or our customers confidential or personal information, or CPNI, could result in significant liability to us, cause our service to be perceived as not being secure, cause considerable harm to us and our reputation
(including requiring notification to customers, regulators or the media), and deter current and potential customers from using our services. Any of these events could have a material adverse effect on our business, results of operations, and
financial condition.

We rely on third parties for some of our software development, quality assurance, operations and customer support.

We currently depend on various third parties for some of our software development efforts, quality assurance, operations and
customer support services. Specifically, we outsource some of our software development, quality assurance and operations activities to third-party contractors that have employees and consultants located in St. Petersburg, Russia and Odessa, Ukraine.
In addition, we outsource a significant portion of our customer support, inside sales and network operation control functions to a third-party contractor located in Manila, the Philippines. Our dependence on third-party contractors creates a number
of risks, in particular, the risk that we may not maintain service quality, control or effective management with respect to these business operations.

Our agreements with these third-party contractors are either not terminable by them (other than at the end of the term or upon an uncured breach by us) or require at least 60 days prior written notice of
termination. If we experience problems with our third-party contractors, the costs charged by our third-party contractors increase or our agreements with our third-party contractors are terminated, we may not be able to develop new solutions,
enhance or operate existing solutions or provide customer support in an alternate manner that is equally or more efficient and cost-effective.

We anticipate that we will continue to depend on these and other third-party relationships in order to grow our business for the foreseeable future. If we are unsuccessful in maintaining existing and, if needed,
establishing new relationships with third parties, our ability to efficiently operate existing services or develop new services and provide adequate customer support could be impaired, and, as a result, our competitive position or our results of
operations could suffer.

Growth may place significant demands on our management and our infrastructure.

We have recently experienced substantial growth in our business. This growth has placed and may continue to place significant demands on our
management and our operational and financial

infrastructure. As our operations grow in size, scope and complexity, we will need to increase our sales and marketing efforts and add additional sales and marketing personnel in various regions
worldwide, and improve and upgrade our systems and infrastructure to attract, service and retain an increasing number of customers. For example, we expect the volume of simultaneous calls to increase significantly as our customer base grows. Our
network hardware and software may not be able to accommodate this additional simultaneous call volume. The expansion of our systems and infrastructure will require us to commit substantial financial, operational, and technical resources in advance
of an increase in the volume of business, with no assurance that the volume of business will increase. Any such additional capital investments will increase our cost base. Continued growth could also strain our ability to maintain reliable service
levels for our customers, develop and improve our operational, financial and management controls, enhance our reporting systems and procedures and recruit, train and retain highly skilled personnel. In addition, given our expected growth, we expect
to move our offices or secure additional space in our current building or another building within the next 12 months. If we fail to achieve the necessary level of efficiency in our organization as we grow, our business, results of operations
and financial condition could be materially and adversely affected.

There has been substantial litigation in the areas in which we operate regarding
intellectual property rights. In the past, we have been sued by third parties claiming infringement of their intellectual property rights and we may be sued for infringement from time to time in the future. Excluding any current litigation, in the
past we have settled infringement litigation brought against us; however, we cannot assure you that we will be able to settle any ongoing or future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable
to us. Our broad range of technology may increase the likelihood that third parties will claim that we infringe their intellectual property rights. In this regard, in June 2011, j2 Global, Inc. and Advanced Messaging Technologies, Inc. named us in a
patent infringement lawsuit seeking a permanent injunction, damages and attorneys fees. In April 2013, we entered into a license and settlement agreement with j2 Global, Inc. and one of its affiliates to settle the matter, as described in
greater detail under the heading BusinessLegal Proceedings. In addition, in December 2012, we were named as a defendant in a patent infringement lawsuit by CallWave Communications, LLC, or CallWave, which we believe to be a
non-practicing entity, as further described under BusinessLegal Proceedings. CallWave has asserted similar claims against other companies, including Google Inc., AT&T Inc., AT&T Mobility LLC, Sprint Nextel Corp., T-Mobile
US, Inc., Verizon Communications, Inc., Research in Motion Limited and Telovations, Inc.

We have in the past received, and may in
the future receive, notices of claims of infringement, misappropriation or misuse of other parties proprietary rights. For instance, in September 2013, we received a letter sent on behalf of Cronos Technologies LLC, which we believe is a
non-practicing entity, asserting that we should consider engaging in licensing discussions regarding a patent. We cannot assure you that we will resolve or settle these claims, or prevail in any resulting legal actions (if ultimately litigated).
Furthermore, regardless of their merits, accusations and lawsuits like these may require significant time and expense to defend, may negatively affect customer relationships, may divert managements attention away from other aspects of our
operations and, upon resolution, may have a material adverse effect on our business, results of operations, financial condition and cash flows.

Certain technology necessary for us to provide our services may, in fact, be patented by other parties either now or in the future. If such technology were validly patented by another person, we would have to
negotiate a license for the use of that technology. We may not be able to negotiate such a license at a price that is acceptable to us or if at all. The existence of such a patent, or our inability to

negotiate a license for any such technology on acceptable terms, could force us to cease using the technology and cease offering services incorporating the technology, which could materially and
adversely affect our business and results of operations.

If we were found to be infringing on the intellectual property rights of any
third party, we could be subject to liability for such infringement, which could be material. We could also be prohibited from using or selling certain services, prohibited from using certain processes, or required to redesign certain services, each
of which could have a material adverse effect on our business and results of operations.

These and other outcomes may:



result in the loss of a substantial number of existing customers or prohibit the acquisition of new customers;



cause us to pay license fees for intellectual property we are deemed to have infringed;

We rely, in part, on patent, trademark, copyright and trade secret law to protect our intellectual property in the U.S. and abroad. We seek to
protect our technology, software, documentation and other information under trade secret and copyright law, which afford only limited protection. For example, we typically enter into confidentiality agreements with our employees, consultants,
third-party contractors, customers and vendors in an effort to control access to use and distribution of our technology, software, documentation and other information. These agreements may not effectively prevent authorized use or disclosure of
confidential information and may not provide an adequate remedy in the event of such unauthorized use or disclosure, and it may be possible for a third party to copy or otherwise obtain and use our technology without authorization. In addition,
improper disclosure of trade secret information by our current or former employees, consultants, third-party contractors, customers or vendors to the public or others who could make use of the trade secret information would likely preclude that
information from being protected as a trade secret.

We also rely, in part, on patent law to protect our intellectual property in the
U.S. and internationally. Our intellectual property portfolio includes 18 issued U.S. patents, which expire between 2026 and 2032. We also have 49 patent applications pending for examination in the U.S. and 21 patent applications pending for
examination in foreign jurisdictions, all of which are related to U.S. applications. We cannot predict whether such pending patent applications will result in issued patents that effectively protect our intellectual property. Even if a pending
patent application results in an issued patent, the patent may be circumvented or its validity may be challenged in various proceedings before the U.S. Patent and

Trademark Office, such as reexamination, which may require legal representation and involve substantial costs and diversion of management time and resources. In addition, we cannot assure you
that every significant feature of our solutions is protected by our patents.

The unlicensed use of our brand, including domain names,
by third parties could harm our reputation, cause confusion among our customers and impair our ability to market our products and services. To that end, we have registered numerous trademarks and service marks and have applied for registration of
additional trademarks and service marks and have acquired a large number of domain names in and outside the U.S. to establish and protect our brand names as part of our intellectual property strategy. If our applications receive objections or are
successfully opposed by third parties, it will be difficult for us to prevent third parties from using our brand without our permission. Moreover, successful opposition to our applications might encourage third parties to make additional oppositions
or commence trademark infringement proceedings against us, which could be costly and time consuming to defend against. If we are not successful in protecting our trademarks, our trademark rights may be diluted and subject to challenge or
invalidation, which could materially and adversely affect our brand.

Despite our efforts to implement our intellectual property
strategy, we may not be able to protect or enforce our proprietary rights in the U.S. or internationally (where effective intellectual property protection may be unavailable or limited). For example, we have entered into agreements containing
confidentiality and invention assignment provisions in connection with the outsourcing of certain software development and quality assurance activities to third-party contractors located in St. Petersburg, Russia and Odessa, Ukraine. We have also
entered into an agreement containing a confidentiality provision with a third-party contractor located in Manila, the Philippines, where we have outsourced a significant portion of our customer support function. We cannot assure you that such
agreements with these third-party contractors or their agreements with their employees and contractors will adequately protect our proprietary rights in the applicable jurisdictions and foreign countries, as their respective laws may not protect
proprietary rights to the same extent as the laws of the U.S. In addition, our competitors may independently develop technologies that are similar or superior to our technology, duplicate our technology in a manner that does not infringe our
intellectual property rights or design around any of our patents. Furthermore, detecting and policing unauthorized use of our intellectual property is difficult and resource-intensive. Moreover, litigation may be necessary in the future to enforce
our intellectual property rights, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Such litigation, whether successful or not, could result in substantial costs and
diversion of management time and resources and could have a material adverse effect on our business, financial condition and results of operations.

Our success depends on the public acceptance of our services and applications.

Our future success depends on our ability to significantly increase revenues generated from our cloud-based business communications solutions. The
market for cloud-based business communications is evolving rapidly and is characterized by an increasing number of market entrants. As is typical of a rapidly evolving industry, the demand for, and market acceptance of, these applications is
uncertain. If the market for cloud-based business communications fails to develop, develops more slowly than we anticipate or develops in a manner different than we expect, our services could fail to achieve market acceptance, which in turn could
materially and adversely affect our business.

Our growth depends on the continued use of voice communications by businesses, as
compared to email and other data-based methods. A decline in the overall rate of voice communications by businesses would harm our business. Furthermore, our continued growth depends on future demand for and adoption of Internet voice communications
systems and services. Although the number of

broadband subscribers worldwide has grown significantly in recent years, a small percentage of businesses have adopted Internet voice communications services to date. For demand and adoption of
Internet voice communications services by businesses to increase, Internet voice communications networks must improve the quality of their service for real-time communications by managing the effects of and reducing packet loss, packet delay and
packet jitter, as well as unreliable bandwidth, so that toll-quality service can be consistently provided. Additionally, the cost and feature benefits of Internet voice communications must be sufficient to cause customers to switch from traditional
phone service providers. We must devote substantial resources to educate customers and their end users about the benefits of Internet voice communications solutions, in general, and our services in particular. If any or all of these factors fail to
occur, our business may be materially and adversely affected.

Interruptions in our services could harm our reputation, result in significant
costs to us, and impair our ability to sell our services.

Because our services are complex and we have incorporated a variety of
new computer hardware, as well as software that is developed in-house and acquired from third-party vendors, our services may have errors or defects that customers identify after they begin using them that could result in unanticipated interruptions
of service. Internet-based services frequently contain undetected errors and bugs when first introduced or when new versions or enhancements are released. While the substantial majority of our customers are small and medium-sized businesses, the use
of our services in complicated, large-scale network environments may increase our exposure to undetected errors, failures or bugs in our services. Although we test our services to detect and correct errors and defects before their general release,
we have from time to time experienced significant interruptions in our service as a result of such errors or defects and may experience future interruptions of service if we fail to detect and correct these errors and defects. The costs incurred in
correcting such defects or errors may be substantial and could harm our results of operations. In addition, we rely on hardware purchased or leased and software licensed from third parties to offer our services.

Any defects in, or unavailability of, our or third-party software or hardware that cause interruptions of our services could, among other things:



cause a reduction in revenues or delay in market acceptance of our services;



require us to issue refunds to our customers or expose us to claims for damages;



cause us to lose existing customers and make it more difficult to attract new customers;



divert our development resources or require us to make extensive changes to our software, which would increase our expenses and slow innovation;



increase our technical support costs; and



harm our reputation and brand.

If we
fail to continue to develop our brand or our reputation is harmed, our business may suffer.

We believe that continuing to
strengthen our current brand will be critical to achieving widespread acceptance of our services and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising have been increasing and may
continue to increase. Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing, and other efforts to create and maintain brand loyalty among users. Brand promotion activities may not yield
increased revenues, and even if they do, any increased revenues may not offset the expenses incurred in building our brands. If we fail to promote and maintain our brand, or if

we incur substantial expense in an unsuccessful attempt to promote and maintain our brands, our business could be materially and adversely affected.

Our services, as well as those of our competitors, are regularly reviewed and commented upon by online media sources, as well as computer and other
business publications. Negative reviews, or reviews in which our competitors products and services are rated more highly than our solutions, could negatively affect our brand and reputation. From time to time, our customers have expressed
dissatisfaction with our services, including dissatisfaction with our customer support, our billing policies and the way our services operate. If we do not handle customer complaints effectively, our brand and reputation may suffer, we may lose our
customers confidence, and they may choose to terminate, reduce or not to renew their subscriptions. In addition, many of our customers participate in social media and online blogs about Internet-based services, including our services, and our
success depends in part on our ability to minimize negative and generate positive customer feedback through such online channels where existing and potential customers seek and share information. If actions we take or changes we make to our services
upset these customers, their blogging could negatively affect our brand and reputation. Complaints or negative publicity about our services or customer service could materially and adversely impact our ability to attract and retain customers and our
business, financial condition and results of operations.

If we experience excessive fraudulent activity or cannot meet evolving credit card
association merchant standards, we could incur substantial costs and lose the right to accept credit cards for payment, which could cause our customer base to decline significantly.

Nearly all of our customers authorize us to bill their credit card accounts directly for service fees that we charge. If people pay for our services
with stolen credit cards, we could incur substantial third-party vendor costs for which we may not be reimbursed. Further, our customers provide us with credit card billing information online or over the phone, and we do not review the physical
credit cards used in these transactions, which increases our risk of exposure to fraudulent activity. We also incur charges, which we refer to as chargebacks, from the credit card companies from claims that the customer did not authorize the credit
card transaction to purchase our service, something that we have experienced in the past. If the number of unauthorized credit card transactions becomes excessive, we could be assessed substantial fines for excess chargebacks and we could lose the
right to accept credit cards for payment. In addition, credit card issuers may change merchant standards, including data protection and documentation standards, required to utilize their services from time to time. We are compliant with the Payment
Card Industry Data Security Standard, or PCI, in the United States and Canada. We are developing a plan to become PCI-compliant in the United Kingdom; however, if we fail to maintain compliance with current merchant standards, such as PCI, or fail
to meet new standards, the credit card associations could fine us or terminate their agreements with us, and we would be unable to accept credit cards as payment for our services. Our services may also be subject to fraudulent usage, including but
not limited to international revenue share fraud, domestic traffic pumping, subscription fraud, premium text message scams, and other fraudulent schemes. Although our customers are required to set Personal Identification Numbers, or PINs, to protect
their accounts and may configure in which destinations international calling is enabled from their extensions, third parties have in the past and may in the future be able to access and use their accounts through fraudulent means. In addition, third
parties may have attempted in the past, and may attempt in the future, to fraudulently induce domestic and international employees or consultants into disclosing customer PINs and other account information. Communications fraud can result in
unauthorized access to customer accounts and customer data, unauthorized use of customers services, charges to customers for fraudulent usage and expense that we must pay to carriers. We may be required to pay for these charges and expenses
with no reimbursement from the customer, and our reputation may be harmed if our services are subject to fraudulent usage. Although we implement multiple fraud prevention and detection controls, we cannot assure you that these controls will be
adequate to protect against fraud. Substantial losses

due to fraud or our inability to accept credit card payments, which could cause our paid customer base to significantly decrease, could have a material adverse effect on our results of
operations, financial condition and ability to grow our business.

Potential problems with our information systems could interfere with our
business and operations.

We rely on our information systems and those of third parties for processing customer orders,
distribution of our services, billing our customers, processing credit card transactions, customer relationship management, supporting financial planning and analysis, accounting functions and financial statement preparation and otherwise running
our business. Information systems may experience interruptions, including interruptions of related services from third-party providers, which may be beyond our control. Such business interruptions could cause us to fail to meet customer
requirements. All information systems, both internal and external, are potentially vulnerable to damage or interruption from a variety of sources, including without limitation, computer viruses, security breaches, energy blackouts, natural
disasters, terrorism, war and telecommunication failures and employee or other theft, as well as third-party provider failures. Any disruption in our information systems and those of the third parties upon which we rely could have a significant
impact on our business.

In addition, we recently transitioned from a number of disparate systems and implemented NetSuite, a SaaS
enterprise resource planning system, to handle various business, operating and financial processes. We plan to transition from a spreadsheet-based financial modeling system and implement a third-party corporate performance management system. In
addition, in the future we intend to implement a third-party SaaS billing system to replace our current internally developed billing system. We may also implement further and enhanced information systems in the future to meet the demands resulting
from our growth and to provide additional capabilities and functionality. The implementation of new systems and enhancements is frequently disruptive to the underlying business of an enterprise, and can be time-consuming and expensive, increase
management responsibilities and divert management attention. Any disruptions relating to our systems enhancements or any problems with the implementation, particularly any disruptions impacting our operations or our ability to accurately report our
financial performance on a timely basis during the implementation period, could materially and adversely affect our business. Even if we do not encounter these material and adverse effects, the implementation of these enhancements may be much more
costly than we anticipated. If we are unable to successfully implement the information systems enhancements as planned, our financial position, results of operations and cash flows could be negatively impacted.

Our use of open source technology could impose limitations on our ability to commercialize our services.

We use open source software in our platform on which our services operate. There is a risk that the owners of the copyrights in such software may
claim that such licenses impose unanticipated conditions or restrictions on our ability to market or provide our services. If such owners prevail in such claim, we could be required to make the source code for our proprietary software (which
contains our valuable trade secrets) generally available to third parties, including competitors, at no cost, to seek licenses from third parties in order to continue offering our services, to re-engineer our technology, or to discontinue offering
our services in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could cause us to discontinue our services, harm our reputation, result in customer losses or claims, increase our costs or otherwise
materially and adversely affect our business and results of operations.

Our services are subject to regulation, and future legislative or regulatory actions could adversely affect our
business and expose us to liability.

Federal Regulation

Our business is regulated by the FCC. As a communications services provider, we are subject to existing or potential FCC regulations relating to
privacy, disability access, porting of numbers, Federal Universal Service Fund, or USF, contributions, E-911, and other requirements. FCC classification of our Internet voice communications services as telecommunications services could result
in additional federal and state regulatory obligations. If we do not comply with FCC rules and regulations, we could be subject to FCC enforcement actions, fines, loss of licenses, and possibly restrictions on our ability to operate or
offer certain of our services. Any enforcement action by the FCC, which may be a public process, would hurt our reputation in the industry, possibly impair our ability to sell our services to customers and could have a materially adverse
impact on our revenues.

Through our wholly owned subsidiary, RCLEC, Inc., we also plan to provide competitive local exchange carrier
services, or CLEC services, which are regulated by the FCC as traditional telecommunications services. Our CLEC services depend on certain provisions of the Telecommunications Act of 1996 that permit us to procure facilities and services from
incumbent local exchange carriers, or ILECs, that are necessary to provide our services. Over the past several years, the FCC has reduced or eliminated a number of regulations governing ILECs offerings. If ILECs are not required by law to
provide services to us or do not continue to permit us to purchase these services from them under commercial arrangements at reasonable rates, our business could be adversely affected and our cost of providing CLEC services could increase. This
could have a materially adverse impact on our results of operations and cash flows.

Our services are also subject to a number of other
FCC regulations. Among others, we must comply (in whole or in part) with:



the Communications Assistance for Law Enforcement Act, or CALEA, which requires covered entities to assist law enforcement in undertaking electronic
surveillance;



requirements to provide E-911 to our customers;



contributions to the USF which requires that we pay a percentage of our revenues to support certain federal programs;



payment of annual FCC regulatory fees based on our interstate and international revenues;



rules pertaining to access to our services by people with disabilities and contributions to the Telecommunications Relay Services fund; and



FCC rules regarding CPNI, which requires that we not use such information without customer approval, subject to certain exceptions.

If we do not comply with any current or future rules or regulations that apply to our business, we could be subject to substantial fines and
penalties, we may have to restructure our service offerings, exit certain markets or raise the price of our services, any of which could ultimately harm our business and results of operations.

State Regulation

States
currently may not regulate our Internet voice communications services. However, states are allowed to assess state USF requirements, E-911 fees and other surcharges on nomadic VoIP providers. A number of states require us to contribute to state USF,
contribute to E-911 and pay other surcharges, while others are actively considering extending their programs to include the services we provide. We pass USF, E-911 fees and other surcharges through to our customers, which may result in our services
becoming more expensive or require that we absorb these costs. We expect that state public utility commissions will continue their attempts to apply state telecommunications regulations to Internet voice communications services like ours.

Our subsidiarys CLEC services are subject to regulation by the public utility regulatory agency
in those states where we provide local telecommunications services. This regulation includes the requirement to obtain a certificate of public necessity or other similar licenses prior to offering our CLEC services. We may also be required
to file tariffs that describe our CLECs services and provide rates for those services. We are also required to comply with state regulations that vary from state to state concerning service quality, disconnection and billing
requirements. State commissions also have authority to review and approve interconnection agreements between incumbent phone carriers and CLECs such as our subsidiary, and to conduct arbitration of disputes arising in the negotiation of such
agreements.

International Regulation

As we expand internationally, we may be subject to telecommunications, consumer protection, data privacy and other laws and regulations in the foreign countries where we offer our services. Internationally, we
currently offer our services in Canada and the United Kingdom, or UK.

We are a provider of Internet voice telecommunications services
in Canada. As a provider of internet voice communications services, we are subject to regulation in Canada by the Canadian Radio-television and Telecommunications Commission, or CRTC. We are registered with the CRTC as a reseller of
telecommunications services and have been issued a basic international telecommunications services, or BITS, licence by the CRTC. As a internet voice communications provider, we are subject to obligations imposed by the CRTC, including providing
access to emergency call E-911 services, providing access to operator assistance, directory information services, number portability, providing minimum customer information, charge customers certain regulatory charges and pay contribution charges.
We are also subject to Canadian federal privacy laws and provincial consumer protection legislation. As a holder of a BITS license, we also must comply with various annual reporting requirements.

As a provider of electronic communications services in the UK, we are subject to regulation in the UK by the Office of Communications. Some of
these regulatory obligations include providing access to emergency call services (E999/112); providing access to operator assistance, directories and directory enquiry services, offering contracts with minimum terms, providing and publishing certain
information transparently, providing itemized billing, protecting customer information (including personal data); porting phone numbers upon a valid customer request and implementing a code of practice. We are required to comply with laws and
matters relating to, among other things, competition law, distance selling, e-commerce and consumer protection. We must also comply with various reporting and recordkeeping requirements.

We process, store, and use personal information and other data, which subjects us and our customers to a variety of evolving governmental regulation, industry standards and self-regulatory schemes,
contractual obligations, and other legal obligations related to privacy, which may increase our costs, decrease adoption and use of our products and services and expose us to liability.

There are a number of federal, state, local and foreign laws and regulations, as well as contractual obligations and industry standards, that
provide for certain obligations and restrictions with respect to data privacy and security, and the collection, storage, retention, protection, use, processing, transmission, sharing, disclosure and protection of personal information and other
customer data. The scope of these obligations and restrictions is changing, subject to differing interpretations, and may be inconsistent among countries or conflict with other rules, and their status remains uncertain. Within the European Union, or
EU, strict laws already apply in connection with the collection, storage, retention, protection, use, processing, transmission, sharing, disclosure and protection of personal information

and other customer data. The EU model has been replicated in many jurisdictions outside the U.S., including Asia-Pacific Economic Cooperation countries. Regulators have the power to fine
non-compliant organizations significant amounts. There are proposals to increase the maximum level of fines that EU regulators may impose to 2% of worldwide annual sales. As Internet commerce and communication technologies continue to evolve,
increasing online service providers and network users capacity to collect, store, retain, protect, use, process and transmit large volumes of personal information, increasingly restrictive regulation by federal, state or foreign agencies
becomes more likely. For example, a variety of regulations that would increase restrictions on online service providers in the area of data privacy is currently being proposed, both in the U.S. and in other jurisdictions, and we believe that the
adoption of increasingly restrictive regulation in the field of data privacy and security is likely, possibly as restrictive as the EU model. Obligations and restrictions imposed by current and future applicable laws, regulations, contracts and
industry standards may affect our ability to provide all the current features of our products and services and our customers ability to use our products and services, and could require us to modify the features and functionality of our
products and services. Such obligations and restrictions may limit our ability to collect, store, process, use, transmit and share data with our customers, and to allow our customer to collect, store, retain, protect, use, process, transmit, share
and disclose data with others through our products and services. Compliance with, and other burdens imposed by, such obligations and restrictions could increase the cost of our operations. Failure to comply with obligations and restrictions related
to data privacy and security could subject us to lawsuits, fines, criminal penalties, statutory damages, consent decrees, injunctions, adverse publicity and other losses that could harm our business.

Our customers can use our services to store contact and other personal or identifying information, and to process, transmit, receive, store and
retrieve a variety of communications and messages, including information about their own customers and other contacts. In addition, customers may use our services to store protected health information, or PHI, that is protected under the Health
Insurance Portability and Accountability Act, or HIPAA, notwithstanding that we inform customers that our services should not be used for these purposes. Noncompliance with laws and regulations relating to privacy and HIPAA may lead to significant
fines, penalties or liabilities. Our actual compliance, our customers perception of our compliance, costs of compliance with such regulations and customer concerns regarding their own compliance obligations (whether factual or in error) may
limit the use and adoption of our service and reduce overall demand. Furthermore, privacy concerns, including the inability or impracticality of providing advance notice to customers of privacy issues related to the use of our services, may cause
our customers customers to resist providing the personal data necessary to allow our customers to use our services effectively. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our service in
certain industries.

In addition to government activity, privacy advocacy groups and industry groups have adopted and are considering
the adoption of various self-regulatory standards and codes of conduct that may place additional burdens on us and our customers, which may further reduce demand for our services and harm our business.

While we try to comply with all applicable data protection laws, regulations, standards, and codes of conduct, as well as our own posted privacy
policies and contractual commitments to the extent possible, any failure by us to protect our users privacy and data, including as a result of our systems being compromised by hacking or other malicious or surreptitious activity, could result
in a loss of user confidence in our services and ultimately in a loss of users, which could materially and adversely affect our business. Our customers may also accidentally disclose their passwords or store them on a mobile device that is lost or
stolen, creating the perception that our systems are not secure against third-party access. Additionally, our third-party contractors in the Philippines, Russia and Ukraine may have access to customer data. If these or other third-party vendors
violate applicable laws or our policies,

such violations may also put our customers information at risk and could in turn have a material and adverse effect on our business.

Use or delivery of our services may become subject to new or increased regulatory requirements, taxes or fees.

The increasing growth and popularity of Internet voice communications heighten the risk that governments will regulate or impose new or increased
fees or taxes on Internet voice communications services. To the extent that the use of our services continues to grow, regulators may be more likely to seek to regulate or impose new or additional taxes, surcharges or fees on our services.
Similarly, advances in technology, such as improvements in locating the geographic origin of Internet voice communications, could cause our services to become subject to additional regulations, fees or taxes, or could require us to invest in or
develop new technologies, which may be costly. In addition, as we continue to expand our user base and offer more services, we may become subject to new regulations, taxes, surcharges or fees. Increased regulatory requirements, taxes, surcharges or
fees on Internet voice communications services, which could be assessed by governments retroactively or prospectively, would substantially increase our costs, and, as a result, our business would suffer. In addition, the tax status of our services
could subject us to conflicting taxation requirements and complexity with regard to the collection and remittance of applicable taxes. Any such additional taxes could harm our results of operations.

Our emergency and E-911 calling services may expose us to significant liability.

The FCC requires Internet voice communications providers, such as our company, to provide E-911 service in all geographic areas covered by the
traditional wire-line E-911 network. Under the FCCs rules, Internet voice communications providers must transmit the callers phone number and registered location information to the appropriate public safety answering point, or PSAP, for
the callers registered location. Our CLEC services are also required by the FCC and state regulators to provide E-911 service to the extent that they are accessed by end users.

We provide E-911 service in compliance with the FCCs rules to substantially all of our customers interconnected VoIP lines. In some
circumstances, 911 calls may be routed to a national emergency call center that routes the call to the appropriate PSAP. In addition, certain of our Internet voice communications services that work with mobile devices and are accessed through
Wi-Fi networks may not be able to complete 911 calls. The FCC is considering requiring providers of Internet voice communications services on mobile devices to provide E-911 service. The adoption of such a requirement could increase our
costs and make our service more expensive, which could adversely affect our results of operations.

In May 2013, the FCC issued an
order requiring all providers of interconnected text messaging services to provide, by September 30, 2013, an automatic bounce-back text message in situations where a consumer attempts to text message to 911 in a location where text-to-911 is
not available. We believe we are in compliance with this order.

In connection with the FCC requirement that we provide E-911 to
all of our interconnected VoIP customers, we must obtain from each customer, prior to the initiation of service, the physical locations at which the service will first be used for each VoIP line. For services that can be utilized from more than one
physical location, we must provide customers one or more methods of updating their physical location. Because we do not validate the physical address at each location where the services may be used by our customers, and because customers may use the
services in locations that differ from the registered location without providing us with the updated information, it is possible that E-911 calls may get routed to the wrong public safety answering point, or PSAP. We are also aware that certain

customer registered addresses are incorrect, or may not have been updated. If E-911 calls are not routed to the correct PSAP, and if the delay results in serious injury or death, we could be sued
and the damages substantial. We are evaluating measures to attempt to verify and update the addresses for locations where our services are used.

We could be subject to enforcement action by the FCC for our customer lines that do not have E-911 service or an FCC challenge to our implementation in full. This enforcement
action could result in significant monetary penalties and restrictions on our ability to offer non-compliant services.

Customers may in
the future attempt to hold us responsible for any loss, damage, personal injury, or death suffered as a result of delayed or uncompleted emergency service calls. The New and Emerging Technologies 911 Improvement Act of 2008 provides that Internet
voice communications providers have the same protections from liability for the operation of 911 service as traditional wire-line and wireless providers. Limitations on liability for the provision of 911 service are normally governed by state law,
and these limitations typically are not absolute. It is also unclear under the FCCs rules whether the limitations on liability would apply to those customer lines for which we do not provide E-911
service.

We rely on third parties to provide the majority of our customer service and support representatives and to fulfill various aspects of
our E-911 service. If these third parties do not provide our customers with reliable, high-quality service, our reputation will be harmed, and we may lose customers.

We offer customer support through both our online account management website and our toll-free customer support number. Our customer support is currently provided via a third-party provider located in the
Philippines, as well as our employees in the U.S. We currently offer support almost exclusively in English. Our third-party providers generally provide customer service and support to our customers without identifying themselves as independent
parties. The ability to support our customers may be disrupted by natural disasters, inclement weather conditions, civil unrest, strikes and other adverse events in the Philippines. Furthermore, as we expand our operations internationally, we may
need to make significant expenditures and investments in our customer service and support to adequately address the complex needs of international customers, such as support in multiple foreign languages.

We also contract with third parties to provide E-911 services, including assistance in routing emergency calls and terminating E-911 calls. Our
providers operate a national call center that is available 24 hours a day, seven days a week, to receive certain emergency calls and maintain PSAP databases for the purpose of deploying and operating E-911 services. On mobile devices, we generally
rely on the underlying cellular or wireless carrier to provide E-911 services. Interruptions in service from our vendors could cause failures in our customers access to E-911 services and expose us to liability and damage our reputation.

If any of these third parties do not provide reliable, high-quality service, our reputation and our business will be harmed. In
addition, industry consolidation among providers of services to us may impact our ability to obtain these services or increase our costs for these services.

We are in the process of expanding our international operations, which exposes us to significant risks.

To date, we have not generated significant revenues from outside of the U.S. and Canada. However, we already have significant operations outside the U.S. and Canada, and we expect to grow our international revenues
in the future. The future success of our business will depend, in part, on our ability to expand our operations and customer base worldwide. Operating in international markets requires significant resources and management attention and will subject
us to regulatory, economic

and political risks that are different from those in the U.S. Because of our limited experience with international operations and developing and managing sales and distribution channels in
international markets, our international expansion efforts may not be successful. In addition, we will face risks in doing business internationally that could materially and adversely affect our business, including:

availability of reliable broadband connectivity and wide area networks in targeted areas for expansion;



lower levels of adoption of credit or debit card usage for Internet related purchases by foreign customers and compliance with various foreign regulations
related to credit or debit card processing and data privacy requirements;



difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions;



export controls and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Departments Office of
Foreign Assets Control;



tariffs and other non-tariff barriers, such as quotas and local content rules;



compliance with various anti-bribery and anti-corruption laws such as the Foreign Corrupt Practices Act and United Kingdom Bribery Act of 2010;



more limited protection for intellectual property rights in some countries;



adverse tax consequences;



fluctuations in currency exchange rates, which could increase the price of our services outside of the U.S., increase the expenses of our international
operations, including expenses related to foreign contractors, and expose us to foreign currency exchange rate risk;



exchange control regulations, which might restrict or prohibit our conversion of other currencies into U.S. Dollars;



restrictions on the transfer of funds;



new and different sources of competition;



deterioration of political relations between the U.S. and other countries, particularly Russia, Ukraine, China and the Philippines; and



political or social unrest or economic instability in a specific country or region.

Our failure to manage any of these risks successfully could harm our future international operations and our overall business.

We depend largely on the continued services of our senior management and other key employees, the loss of any of whom could adversely affect our business,
results of operations and financial condition.

Our future performance depends on the continued services and contributions of our
senior management and other key employees to execute on our business plan, and to identify and pursue

opportunities and services innovations. The loss of services of senior management or other key employees could significantly delay or prevent the achievement of our development and strategic
objectives. In particular, we depend to a considerable degree on the vision, skills, experience and effort of our co-founder, Chairman and Chief Executive Officer, Vladimir Shmunis. None of our executive officers or other senior management personnel
is bound by a written employment agreement and any of them may therefore terminate employment with us at any time with no advance notice. The replacement of any of these senior management personnel would likely involve significant time and costs,
and such loss could significantly delay or prevent the achievement of our business objectives. In addition, certain members of our senior management team, including our President, who joined us in June 2013, and our Chief Financial Officer, who
joined us in August 2013, have worked together for only a relatively short period of time and it may be difficult to evaluate their effectiveness, on an individual or collective basis, and ability to address future challenges to our business. The
loss of the services of our senior management or other key employees for any reason could adversely affect our business, financial condition or results of operations.

If we are unable to hire, retain and motivate qualified personnel, our business will suffer.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel. We believe that there is, and will continue to be, intense competition for highly skilled technical
and other personnel with experience in our industry in the San Francisco Bay Area, where our headquarters is located, and in other locations where we maintain offices. We must provide competitive compensation packages and a high-quality work
environment to hire, retain and motivate employees. If we are unable to retain and motivate our existing employees and attract qualified personnel to fill key positions, we may be unable to manage our business effectively, including the development,
marketing and sale of existing and new services, which could have a material adverse effect on our business, financial condition and results of operations. To the extent we hire personnel from competitors, we may be subject to allegations that they
have been improperly solicited or divulged proprietary or other confidential information.

Volatility in, or lack of performance of, our
stock price may also affect our ability to attract and retain key personnel. Many of our key personnel are, or will soon be, vested in a substantial amount of shares of common stock or stock options. Employees may be more likely to terminate their
employment with us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices
of the options that they hold are significantly above the market price of our Class A common stock. If we are unable to retain our employees, our business, results of operations, and financial condition will be harmed.

We may expand through acquisitions of, or investments in, other companies, each of which may divert our managements attention, result in additional
dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations.

Our business
strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses. We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate
technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company. Any such acquisition or investment could materially and
adversely affect our results of operations. Acquisitions and other strategic investments involve significant risks and uncertainties, including:



the potential failure to achieve the expected benefits of the combination or acquisition;



unanticipated costs and liabilities;



difficulties in integrating new products and services, software, businesses, operations and technology infrastructure in an efficient and effective manner;

the diversion of the attention of our senior management from the operation of our daily business;



the potential adverse effect on our cash position to the extent that we use cash for the purchase price;



the potential significant increase of our interest expense, leverage, and debt service requirements if we incur additional debt to pay for an acquisition;



the potential issuance of securities that would dilute our stockholders percentage ownership;



the potential to incur large and immediate write-offs and restructuring and other related expenses; and



the inability to maintain uniform standards, controls, policies and procedures.

Any acquisition or investment could expose us to unknown liabilities. Moreover, we cannot assure you that we will realize the anticipated benefits
of any acquisition or investment. In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively, and in a timely manner could impair our ability to take advantage of future growth opportunities
and other advances in technology, as well as on our revenues, gross margins and expenses.

We may be subject to liabilities on past sales for
taxes, surcharges and fees.

Prior to 2012, we did not collect or remit U.S. state or municipal sales, use, excise, utility user
and ad valorem taxes, fees or surcharges on the charges to our customers for our services or goods, except that we have historically complied with the collection of certain California sales/use taxes and financial contributions to the California
9-1-1 system (the Emergency Telephone Users Surcharge) and federal USF. For periods prior to 2012, with limited exception, we believe that we were generally not subject to taxes, fees, or surcharges imposed by other U.S. state and municipal
jurisdictions or that such taxes, fees, or surcharges did not apply to our service. There is uncertainty as to what constitutes sufficient in state presence for a state to levy taxes, fees and surcharges for sales made over the Internet.
Therefore, taxing authorities may challenge our position and may decide to audit our business and operations with respect to sales, use, telecommunications and other taxes, which could result in increased tax liabilities for us or our customers,
which could materially and adversely affect our results of operations and our relationships with our customers.

In 2012, we voluntarily
began collecting and remitting U.S. state sales, use or other taxes, surcharges, and fees. The collection of these taxes, fees, or surcharges could have the effect of decreasing or eliminating price advantages we may have had over other providers.
We may not accurately calculate these taxes, particularly in foreign jurisdictions. In addition, we have recorded a contingent sales tax liability for sales prior to 2012. If our ultimate liability exceeds the collected and accrued amount, it could
result in significant charges to our earnings.

Finally, the application of other indirect taxes (such as sales and use tax, value added
tax, or VAT, goods and services tax, business tax, and gross receipt tax) to e-commerce businesses, such as ours, is a complex and evolving area. In November 2007, the U.S. federal government enacted legislation extending the moratorium on states
and other local authorities imposing access or discriminatory taxes on the Internet through November 2014. This moratorium does not prohibit federal, state, or local authorities from collecting taxes on our income or from collecting taxes that are
due under existing tax rules. The application of existing, new, or future laws, whether in the U.S. or internationally, could have

adverse effects on our business, prospects, and results of operations. There have been, and will continue to be, substantial ongoing costs associated with complying with the various indirect tax
requirements in the numerous markets in which we conduct or will conduct business.

Changes in effective tax rates, or adverse outcomes resulting
from examination of our income or other tax returns, could adversely affect our results of operations and financial condition.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:



changes in the valuation of our deferred tax assets and liabilities;



expiration of, or lapses in, the research and development tax credit laws;

We may be unable to use some or all of our net operating loss carryforwards, which could materially and adversely affect our reported financial condition and results of operations.

As of December 31, 2012, we had federal and state net operating loss carryforwards, or NOLs, due to prior period losses, which, if not
utilized, will begin to expire in 2023 and 2013 for federal and state purposes, respectively. We also have federal research tax credit carryforwards that will begin to expire in 2028. Realization of these net operating loss and research tax credit
carryforwards depends on future income, and there is a risk that our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could materially and adversely affect our results of operations.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, our ability to utilize net operating
loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an ownership change. A Section 382 ownership change generally occurs if one or more
stockholders or groups of stockholders, who own at least 5% of our stock, increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax
laws.

As of December 31, 2012, we had federal and state net operating loss carryforwards of $61.9 million and
$60.4 million, respectively, available to offset future taxable income, which expire in various years through 2023 if not utilized. No deferred tax assets have been recognized on our balance sheet related to these NOLs, as they are fully
reserved by a valuation allowance. A lack of future taxable income would adversely affect our ability to utilize these NOLs before they expire. Under the provisions of the Internal Revenue Code of 1986, as amended, or the Code, and similar state law
provisions, substantial changes in our ownership may limit the amount of pre-change NOLs that can be utilized annually in the future to offset taxable income. Section 382 of the Code imposes limitations on a companys ability to use NOLs
if a company experiences a more-than-50-percent ownership change over a three-year testing period. For these reasons, we may not be able to utilize a material portion of the NOLs, even if we achieve profitability. If we are limited in our ability to
use our NOLs in future years

in which we have taxable income, we will pay more taxes than if we were able to fully utilize our NOLs. This could materially and adversely affect our results of operations.

As a result of becoming a public company, we will need to further develop and maintain our internal control over financial reporting. If our internal control
over financial reporting is not effective, it may adversely affect investor confidence in our company.

We may be required,
pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this
offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

We are in the early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able
to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to
assert that our internal controls are effective. For example, in connection with the audit of our consolidated financial statements for fiscal 2011, our independent registered public accounting firm identified a material weakness in our internal
control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual
or interim financial statements will not be prevented or detected on a timely basis. The material weakness that our independent registered public accounting firm identified related to our lack of sufficient, qualified personnel in accounting and
financial reporting matters to perform process level controls and other controls. We believe that we remediated this material weakness in 2012.

However, in connection with the audit of our consolidated financial statements for fiscal 2012, our independent registered public accounting firm identified two significant deficiencies. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our
financial reporting. The significant deficiencies that our independent registered public accounting firm identified in connection with our fiscal 2012 audit related to our lack of sufficient controls to enable our timely remittance of sales tax
liabilities and inadequate controls related to the accounting process and incomplete documentation of accounting and financial period close procedures.

If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our
internal controls when it is required to do so by the applicable rules, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline, and we may
be subject to investigation or sanctions by the Securities and Exchange Commission, or the SEC.

We will be required to disclose changes
made in our internal control and procedures on a quarterly basis. However, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to
Section 404 until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an emerging growth company as defined in the recently enacted Jumpstart our Business Startups
Act of 2012, or JOBS Act, if we take advantage of the exemptions contained in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which
our controls are

documented, designed or operating. As a result, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff.
Our remediation efforts may not enable us to avoid a material weakness in the future.

We may not be successful in obtaining local access services
through our newly-created CLEC.

We have formed a competitive local exchange carrier subsidiary, RCLEC, to allow us to purchase
network services directly from ILECs and from other CLECs in certain geographic markets, at lower prices than we pay for such services through third-party network service providers, such as Level 3 Communications, Inc. and Bandwidth.com, Inc., and
to help us improve our quality of service. However, the ILECs may favor themselves and their affiliates and may not provide network services to us at lower prices than we could obtain through Level 3 Communications, Inc., Bandwidth.com, Inc., other
third-party CLECs, or at all. If we are unable to reduce our pricing as a result of obtaining network services through our subsidiary, we may be forced to rely on other third-party network service providers and be unable to effectively lower
our cost of service. Further, creation and maintenance of a CLEC requires significant expenditures, and we may not realize much or any benefit from our investment in our subsidiary if we do not reduce our costs of network service through our
subsidiary. In addition, if ILECs or other CLECs do not provide us with any access, we will not be able to use our RCLEC subsidiary as intended to improve the quality of our services or lower the cost of our services.

If we are unable to effectively process local number and toll-free number portability provisioning in a timely manner, our growth may be negatively affected.

We support local number and toll-free number portability, which allows our customers to transfer to us and thereby retain their
existing phone numbers when subscribing to our services. Transferring numbers is a manual process that can take up to 15 business days or longer to complete. A new customer of our services must maintain both our service and the customers
existing phone service during the number transferring process. Any delay that we experience in transferring these numbers typically results from the fact that we depend on third-party carriers to transfer these numbers, a process that we do not
control, and these third-party carriers may refuse or substantially delay the transfer of these numbers to us. Local number portability is considered an important feature by many potential customers, and if we fail to reduce any related delays, we
may experience increased difficulty in acquiring new customers. Moreover, the FCC requires Internet voice communications providers, which are companies like us that provide services similar to traditional phone companies, including the ability to
make calls to and receive calls from the public phone network, to comply with specified number porting timeframes when customers leave our service for the services of another provider. If we, or our third-party carriers, are unable to process number
portability requests within the requisite timeframes, we could be subject to fines and penalties. Additionally, both customers and carriers may seek relief from the relevant state public utility commission, the FCC, or in state or federal court for
violation of local number portability requirements.

Our business could suffer if we cannot obtain or retain direct inward dialing numbers, or
DIDs, are prohibited from obtaining local or toll-free numbers, or are limited to distributing local or toll-free numbers to only certain customers.

Our future success depends on our ability to procure large quantities of local and toll-free DIDs in the U.S. and foreign countries in desirable locations at a reasonable cost and without restrictions. Our ability
to procure and distribute DIDs depends on factors outside of our control, such as applicable regulations, the practices of the communications carriers that provide DIDs, the cost of these DIDs, and the level of demand for new DIDs. Due to their
limited availability, there are certain popular area code prefixes that we generally cannot obtain. Our inability to acquire DIDs for our operations would make our services less attractive to potential customers in the affected local geographic
areas. In addition, future growth in our customer base, together with growth in the customer bases of other

providers of cloud-based business communications, has increased, which increases our dependence on needing sufficiently large quantities of DIDs.

We rely on third-party hardware and software that may be difficult to replace or which could cause errors or failures of our service.

We rely on purchased or leased hardware and software licensed from third parties in order to offer our service. In some cases, we integrate
third-party licensed software components into our platform. This hardware and software may not continue to be available at reasonable prices or on commercially reasonable terms, or at all. Any loss of the right to use any of this hardware or
software could significantly increase our expenses and otherwise result in delays in the provisioning of our service until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated. Any errors or
defects in third-party hardware or software could result in errors or a failure of our service which could harm our business.

We depend on two
vendors and one fulfillment agent to configure and deliver the phones that we sell, and any delay or interruption in manufacturing, configuring and delivering by these third parties would result in delayed or reduced shipments to our customers and
may harm our business.

We rely on Cisco Systems, Inc. and Polycom, Inc. for phones that we offer for sale to our customers that
use our services. In addition, we rely on one fulfillment agent to configure and deliver our phones to our customers. We currently do not have long-term contracts with these vendors or with the fulfillment agent. As a result, these third parties are
not obligated to provide products to or perform services for us for any specific period, in any specific quantities or at any specific price, except as may be provided in a particular purchase order. If these third parties are unable to deliver
phones of acceptable quality or in a timely manner, our ability to bring services to market, the reliability of our services and our reputation could suffer. We expect that it could take several months to effectively transition to new third-party
manufacturers or fulfillment agents.

If our vendor-supplied phones are not able to interoperate effectively with our own back-end servers and
systems, our customers may not be able to use our service, which could harm our business, financial condition and results of operations.

Phones must interoperate with our back-end servers and systems, which contain complex specifications and utilize multiple protocol standards and software applications. Currently, the phones we sell are manufactured
by only two third-party providers, Cisco Systems, Inc. and Polycom, Inc. If either of these providers changes the operation of their phones, we will be required to undertake development and testing efforts to ensure that the new phones interoperate
with our system. These efforts may require significant capital and employee resources, and we may not accomplish these development efforts quickly or cost-effectively, if at all. If our vendor-supplied phones do not interoperate effectively with our
system, our customers ability to use our services could be delayed or orders for our services could be cancelled, which would harm our business, financial condition and results of operations.

We may not be able to manage our inventory levels effectively, which may lead to inventory obsolescence that would force us to incur inventory write-downs.

Our vendor-supplied phones have lead times of up to 20 weeks for delivery and are built to forecasts that are necessarily
imprecise. It is likely that from time to time we will have either excess or insufficient product inventory. In addition, because we rely on third-party vendors for the supply of our vendor-supplied phones, our inventory levels are subject to the
conditions regarding the timing of

purchase orders and delivery dates that are not within our control. Excess inventory levels would subject us to the risk of inventory obsolescence, while insufficient levels of inventory may
negatively affect relations with customers. For instance, our customers rely upon our ability to meet committed delivery dates, and any disruption in the supply of our services could result in loss of customers or harm to our ability to attract new
customers. Any of these factors could have a material adverse effect on our business, financial condition or results of operations.

We may
require additional capital to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances. If capital is not available to us, our business, results of operations and financial condition may be
adversely affected.

We intend to continue to make expenditures and investments to support the growth of our business and may
require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including the need to develop new solutions or enhance our existing solutions, enhance our operating
infrastructure, and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them on terms that are
acceptable to us, or at all. Any debt financing that we secure in the future could involve further restrictive covenants, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

As of June 30, 2013, we were not in compliance with the covenant in our credit agreement with Silicon Valley Bank regarding maintaining a
minimum cash balance. Silicon Valley Bank waived this non-compliance effective August 14, 2013. We cannot assure you that we will be able to comply with this covenant or any other affirmative or negative covenants in future quarters, as
required by our credit agreements. In the event that we are unable to comply with these covenants in the future, we would seek an amendment or waiver of the covenants. We cannot assure you that any such waiver or amendment would be granted. In such
event, we may be required to repay any or all of our existing borrowings, and we cannot assure you that we will be able to borrow under our existing credit agreements, or obtain alternative funding arrangements on commercially reasonable terms, or
at all.

In addition, volatility in the credit markets may have an adverse effect on our ability to obtain debt financing. If we raise
additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those
of holders of our Class A common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business
opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be materially and adversely affected.

Our corporate headquarters, one of our data centers and co-location facilities, our sole third-party customer service and support facility, and a research
and development facility are located near known earthquake fault zones, and the occurrence of an earthquake, tsunami or other catastrophic disaster could damage our facilities or the facilities of our contractors, which could cause us to curtail our
operations.

Our corporate headquarters, one of our data centers and one of our subsidiarys co-location facilities are
located in northern California, our customer service call center operated by our contractor is located in the Philippines, and one of our research and development facilities is located on the coast of China. All of these locations are on the Pacific
Rim near known earthquake fault zones and, therefore, are vulnerable to damage from earthquakes and tsunamis. Additionally, our China facility, our sole third-party customer service and support facility in the Philippines, and our CLEC
subsidiarys

co-location facility in Florida are located in areas subject to hurricanes. We and our contractors are also vulnerable to other types of disasters, such as power loss, fire, floods, pandemics,
cyber attack, war, political unrest and terrorist attacks and similar events that are beyond our control. If any disasters were to occur, our ability to operate our business could be seriously impaired, and we may endure system interruptions,
reputational harm, loss of intellectual property, delays in our services development, lengthy interruptions in our services, breaches of data security and loss of critical data, all of which could harm our future results of operations. In addition,
we do not carry earthquake insurance and we may not have adequate insurance to cover our losses resulting from other disasters or other similar significant business interruptions. Any significant losses that are not recoverable under our insurance
policies could seriously impair our business and financial condition.

The requirements of being a public company may strain our resources, divert
managements attention and affect our ability to attract and retain executive management and qualified board members.

As a
public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of the securities exchange on which our Class A common stock will be traded and other applicable securities rules and regulations.
Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer
an emerging growth company. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. The
Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our
disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, managements attention may be diverted from other business
concerns, which could harm our business and results of operations. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which will
increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public
disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due
to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses
and a diversion of managements time and attention from revenue-generating activities to compliance activities. Our failure to comply with these laws, regulations and standards could materially and adversely affect our business and results of
operations.

However, for as long as we remain an emerging growth company as defined in the JOBS Act we will take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, exemption from the requirement to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden parachute payments

not previously approved. We will take advantage of these reporting exemptions until we are no longer an emerging growth company.

We will cease to be an emerging growth company upon the earliest of (i) the first fiscal year following the fifth anniversary of
this offering, (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or
(iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer
liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors,
particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of
information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in more litigation, including by competitors and other third parties. If such
claims are successful, our business and results of operations could be materially and adversely affected, and even if the claims do not result in litigation or are resolved in our favor. These claims, and the time and resources necessary to resolve
them, could divert the resources of our management and materially and adversely affect our business and results of operations.

We are an
emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act, and we will take advantage of certain exemptions from various reporting
requirements that apply to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. We cannot predict if investors will find our Class A common stock less attractive because we may rely on these exemptions. If some investors find our Class A common stock less attractive as a
result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of
this extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act
provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

An active trading market for our Class A common stock may not develop and the market price for our Class A common stock may decline below the
initial public offering price.

Prior to this offering, there has not been a public market for our Class A common stock. An
active trading market for our Class A common stock may never develop or be sustained, which could adversely impact your ability to sell your shares and could depress the market price of your shares. In addition, the public offering price for
our Class A common stock has been determined through negotiations among us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market upon completion of this offering. Consequently, you
may be unable to sell your shares of our Class A common stock at prices equal to or greater than the price you paid for them.

The market
price of our Class A common stock is likely to be volatile and could decline following this offering, resulting in a substantial loss of your investment.

The stock market in general, and the market for technology-related stocks in particular, has been highly volatile. As a result, the market price and trading volume for our Class A common stock may also be
highly volatile, and investors in our Class A common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Factors that could cause the market price of our
Class A common stock to fluctuate significantly include:



our operating and financial performance and prospects and the performance of other similar companies;



our quarterly or annual earnings or those of other companies in our industry;



conditions that impact demand for our services;



the publics reaction to our press releases, financial guidance, and other public announcements, and filings with the Securities and Exchange Commission, or
SEC;



changes in earnings estimates or recommendations by securities or research analysts who track our Class A common stock;

sales of common stock by us, our investors or members of our management team; and



changes in general market, economic, and political conditions in the U.S. and global economies or financial markets, including those resulting from natural
disasters, telecommunications failure, cyber attack, civil unrest in various parts of the world, acts of war, terrorist attacks, or other catastrophic events.

Any of these factors may result in large and sudden changes in the trading volume and market price of our Class A common stock and may prevent
you from being able to sell your shares at or above the price you paid for your shares of our Class A common stock. Following periods of volatility in the market price of a companys securities, stockholders often file securities
class-action lawsuits against such company. Our involvement in a class-action lawsuit could divert our senior managements

attention and, if adversely determined, could have a material and adverse effect on our business, financial condition and results of operations.

Future sales of our Class A common stock in the public market could cause our share price to decline.

Sales of a substantial number of shares of our Class A common stock in the public market after this offering, or the perception that these
sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. Based upon the total number of outstanding shares of our common stock
as of June 30, 2013, upon completion of this offering, we will have 53,248,648 shares of Class B common stock and 7,500,000 shares of Class A common stock outstanding, assuming no exercise of our outstanding options and the sale of 80,000
shares of Class A common stock by the selling stockholders.

All of the shares of our Class A common stock sold in this
offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our affiliates as defined in Rule 144 under the
Securities Act. The remaining 53,248,648 shares of Class B common stock outstanding after this offering, based on shares outstanding as of June 30, 2013 and assuming the conversion of all shares of our preferred stock into shares of our Class B
common stock, will be restricted as a result of securities laws, lock-up agreements, or other contractual restrictions that restrict transfers for at least 180 days after the date of this prospectus, subject to certain exceptions.

After the completion of this offering, the holders of an aggregate of 31,956,794 shares of Class B common stock, or 52.4% of the total number
of outstanding shares of our Class A and Class B common stock, based on shares outstanding as of June 30, 2013 and giving effect to the sale of shares by the selling stockholders, including holders of warrants exercisable for 260,159
shares of Class B common stock, in each case calculated on a fully diluted basis, or their permitted transferees, will be entitled to rights with respect to registration of these shares under the Securities Act pursuant to an investors rights
agreement. Shares of our Class B common stock automatically will convert into shares of our Class A common stock upon any sale or transfer, whether or not for value, except for certain transfers described in our amended and restated certificate
of incorporation to become effective upon completion of this offering. If these holders of our Class B common stock, by exercising their registration rights, sell a large number of shares, they could materially and adversely affect the market price
for our Class A common stock. If we file a registration statement for the purposes of selling additional shares to raise capital and are required to include shares held by these holders pursuant to the exercise of their registration rights, our
ability to raise capital may be impaired. In addition, as of June 30, 2013, there were outstanding options to purchase 9,743,107 shares of our Class B common stock, 4,386,462 shares of which were vested as of June 30, 2013. Immediately
following this offering, we intend to file a registration statement on Form S-8 registering the shares issuable upon the exercise of these existing options, for the 6,200,000 shares of our Class A common
stock reserved for issuance under our 2013 Equity Incentive Plan and for the 1,250,000 shares of our Class A common stock reserved for issuance under our 2013 Employee Stock Purchase Plan. Assuming effectiveness of the registration statement on
Form S-8, these shares will be freely tradable, although they will be subject to the lock-up arrangements we describe below and elsewhere in this prospectus and vesting limitations.

In connection with this offering, we, our directors and officers, and substantially all of our stockholders and holders of options to purchase our
stock, have agreed, subject to certain limited exceptions, not to offer, sell, contract to sell or otherwise dispose of, or enter into, any transaction that is designed to, or could be expected to, result in the disposition of any shares of our
common stock or other securities convertible into or exchangeable or exercisable for shares of our common stock for 180 days after the date of this prospectus without the prior written consent of Goldman, Sachs & Co.

and J.P. Morgan Securities LLC. In the case of releases with respect to our officers or directors, the representatives of the underwriters will, at least three business days before the effective
date of such release, notify us of the impending release. We have agreed to announce such release by press release through a major news service at least two business days before the effective date of the release. We cannot predict what effect, if
any, market sales of securities held by our stockholders or the availability of these securities for future sale will have on the market price of our Class A common stock. See Underwriting and Shares Eligible for Future
Sale for a more detailed description of the restrictions on selling our securities after this offering.

We may also issue shares
of our Class A common stock or other securities from time to time as consideration for future acquisitions and investments. If any such acquisition or investment is significant, the number of shares of our Class A common stock, or the
number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial. We may also grant registration rights covering those shares of our Class A common stock or other securities in
connection with any such acquisitions and investments.

The dual class structure of our common stock as contained in our charter documents has the
effect of concentrating voting control with a limited number of stockholders that held our stock prior to this offering, including our founders and our executive officers, employees and directors and their affiliates, and venture capital investors,
and limiting your ability to influence corporate matters.

Our Class B common stock has 10 votes per share, and our
Class A common stock, which is the stock we are offering in this offering, has one vote per share. Stockholders who hold shares of Class B common stock, including our founders, previous investors and our executive officers, employees and
directors and their affiliates, will together hold approximately 98.6% of the voting power of our outstanding capital stock immediately following this offering. As a result, for the foreseeable future, our existing stockholders will have significant
influence over the management and affairs of our company and over the outcome of all matters submitted to our stockholders for approval, including the election of directors and significant corporate transactions, such as a merger, consolidation or
sale of substantially all of our assets.

In addition, the holders of Class B common stock collectively will continue to control
all matters submitted to our stockholders for approval even if their stock holdings represent less than 50% of the outstanding shares of our common stock. Because of the ten-to-one voting ratio between our Class B and Class A common stock, the
holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock so long as the shares of Class B common stock represent at least 10% of all outstanding shares of our Class A
and Class B common stock. This concentrated control will limit your ability to influence corporate matters for the foreseeable future, and, as a result, the market price of our Class A common stock could be adversely affected.

Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, which will have
the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. If, for example, Mr. Shmunis retains a significant portion of his holdings of Class B common stock
for an extended period of time, he could, in the future, control a majority of the combined voting power of our Class A and Class B common stock. As a board member, Mr. Shmunis owes a fiduciary duty to our stockholders and must act in good
faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Shmunis is entitled to vote his shares in his own interests, which may not always be in the
interests of our stockholders generally. For a description of the dual class structure, see Description of Capital StockProvisions of Our Certificate of Incorporation and Bylaws and Delaware Anti-Takeover Law.

Because the initial public offering price for shares of our Class A common stock is substantially higher
than the pro forma net tangible book value per share of our outstanding Class A and Class B common stock immediately following this offering, new investors will incur immediate and substantial dilution.

The initial public offering price will be substantially higher than the pro forma net tangible book value per share of our Class A and Class B
common stock immediately following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase Class A common stock in this offering, you will experience immediate and substantial
dilution of approximately $11.03 per share, representing the difference between the price per share you paid for our Class A common stock and its pro forma net tangible book value per share as of June 30, 2013, after giving effect to the
issuance of 7,420,000 shares of our Class A common stock in this offering. Furthermore, investors purchasing shares of our Class A common stock in this offering will only own approximately 12.2% of our outstanding shares of Class A
and Class B common stock (and have only 1.4% of the combined voting power of the outstanding shares of our Class A and Class B common stock) after the offering even though the new investors aggregate investment will represent 53.7% of the
total consideration received by us in connection with all initial sales of 60,718,648 shares of our capital stock outstanding as of June 30, 2013, after giving effect to the issuance of 7,420,000 shares of Class A common stock to be sold in
this offering and 80,000 shares of our Class A common stock to be sold by the selling stockholders. See Dilution on page 52 for a more complete description of how the value of your investment in our Class A common stock
will be diluted upon the completion of this offering.

We may invest or spend the proceeds of this offering in ways with which you may not
agree or in ways which may not yield a return.

We intend to use the net proceeds from our offering for working capital or other
general corporate purposes. We may also repay in part or in full the outstanding principal and accrued interest on our term loans. In addition, we may use a portion of the net proceeds for capital expenditures and for possible acquisitions of
complementary businesses, technologies or other assets. Our management will have considerable discretion in the application of the net proceeds that we receive in this offering, and you will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used appropriately. Therefore, you must rely on the judgment of our management regarding the application of the net proceeds of this offering. The failure by our management to apply these proceeds
effectively could materially and adversely affect our business and financial condition. The net proceeds may be used for corporate purposes that do not improve our results of operations or market value. Until the net proceeds are used, they may be
placed in investments that do not produce significant income or that may lose value.

We have never paid cash dividends and do not anticipate
paying any cash dividends on our common stock.

We currently do not plan to declare dividends on share of our common stock in the
foreseeable future and plan to, instead, retain any earnings to finance our operations and growth. Because we have never paid cash dividends and do not anticipate paying any cash dividends on our common stock in the foreseeable future, the only
opportunity to achieve a return on your investment in our company will be if the market price of our Class A common stock appreciates and you sell your shares at a profit. There is no guarantee that the price of our Class A common stock
that will prevail in the market after this offering will ever exceed the price that you pay.

If research analysts do not publish research or reports about our business, or if they issue unfavorable
commentary or downgrade our Class A common stock, our stock price and trading volume may decline.

The trading market for
our Class A common stock will depend in part on the research and reports that research analysts publish about us and our business. If we do not establish and maintain adequate research coverage or if one or more analysts who covers us
downgrades our stock or publishes inaccurate or unfavorable research about our business, the price of our Class A common stock may decline. If one or more of the research analysts ceases coverage of our company or fails to publish reports on us
regularly, demand for our Class A common stock may decrease, which could cause our stock price or trading volume to decline.

Anti-takeover
provisions in our restated certificate of incorporation and bylaws that will be in effect at or upon consummation of this offering and under Delaware corporate law could make an acquisition of us more difficult, limit attempts by our stockholders to
replace or remove our current management and limit the market price of our Class A common stock.

Provisions in our
certificate of incorporation and bylaws, as amended and restated in connection with this offering, may have the effect of delaying or preventing a change of control or changes in our management. Our certificate of incorporation and bylaws will
include provisions that:



authorize our board of directors to issue, without further action by the stockholders, up to 100,000,000 shares of undesignated preferred stock;



require that, once our outstanding shares of Class B common stock represent less than a majority of the combined voting power of our common stock, any action to
be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; specify that special meetings of our stockholders can be called only by our board of directors, the Chair of our board of directors, or
our Chief Executive Officer;



establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to
our board of directors;



establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving three-year staggered
terms;



prohibit cumulative voting in the election of directors;



provide that our directors may be removed only for cause;



provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;



require the approval of our board of directors or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain
provisions of our certificate of incorporation; and



reflect two classes of common stock, as discussed above.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors,
which is responsible for appointing the members of our management. In addition, because we intend to reincorporate in Delaware, we will be governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally
prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any interested stockholder for a period of three years following the date on which the stockholder became an interested
stockholder.

This prospectus contains forward-looking statements. We have based these forward-looking statements largely on our current expectations and
projections about future events and financial trends affecting our business. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which
such performance or results will be achieved. Forward-looking statements are based on information available to our management at the date of this prospectus and our managements good faith belief as of such date with respect to future events,
and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but
are not limited to:

other factors discussed in this prospectus under Risk Factors and Managements Discussion and Analysis of Financial Condition and Results
of Operations.

In addition, in this prospectus, the words anticipate, believe,
continue, could, seek, might, estimate, expect, intend, may, plan, potential, predict, approximately,
project, should, will, would or the negative or plural of these words or similar expressions, as they relate to our company, business and management, are intended to identify forward-looking
statements. In light of these risks and uncertainties, the future events and circumstances discussed in this prospectus may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in Risk Factors and elsewhere in
this prospectus. We derive many of our forward-looking statements from our operating budgets and forecasts, which we base on many assumptions. While we believe that our assumptions are reasonable, we caution that it is difficult to predict the
impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Given these uncertainties, you should not place undue reliance on these forward-looking statements. You should read this prospectus
and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Forward-looking statements speak only as of the date of this prospectus. We caution you that the
foregoing list of important factors may not contain all of the material factors that are important to you. Except as required by law, we assume no obligation to publicly update or revise any forward-looking statement to reflect actual results,
changes in assumptions based on new information, future events or otherwise. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking
statements.

INDUSTRY AND MARKET DATA

This prospectus contains estimates and other statistical data that we have obtained or derived from industry publications and reports, including
reports from Infonetics Research, Gartner, Inc., or Gartner, and International Data Corporation, or IDC. These industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but
do not guarantee the accuracy and completeness of their information. This information involves a number of assumptions, limitations and estimates, and we cannot assure you that any of them will prove to be accurate. Based on our industry experience,
we believe that these publications and reports are reliable and that the conclusions contained in the publications and reports are reasonable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of
factors, including those described in Risk Factors. These and other factors could cause our actual results to differ materially from those expressed in the industry publications and reports.

The Gartner report described herein, or the Gartner Report, represents data, research opinion or viewpoints published, as part of a syndicated
subscription service, by Gartner. The Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner Report are subject to change without notice.

We estimate that the net proceeds to us from the sale of the Class A common stock that we are offering will be approximately
$79.2 million, based on an assumed initial public offering price of $12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us. Our net proceeds will increase by approximately $12.6 million if the underwriters exercise in full their option to purchase additional shares from us. Each $1.00 increase
(decrease) in the assumed initial public offering price of $12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us of this
offering by approximately $6.9 million, assuming that the number of shares offered by us, as listed on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us. Similarly, each increase (decrease) of 1,000,000 shares in the number of shares of Class A common stock offered by us would increase (decrease) the net proceeds to us from this offering by approximately
$11.2 million, assuming that the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds
from shares sold by the selling stockholders.

The principal purposes of this offering are to increase our financial flexibility,
increase our visibility in the marketplace and create a public market for our Class A common stock. We intend to use the net proceeds that we receive from this offering for working capital or other general corporate purposes, including
additional marketing expenditures, the expansion of our sales organization, international expansion, and further development of our solutions. We also intend to use a portion of the net proceeds for capital expenditures for expansion of our network
infrastructure as we grow our customer base in the U.S. and internationally.

We may also use a portion of the net proceeds from this
offering to repay the outstanding principal and accrued interest on our existing loans with TriplePoint Capital LLC. As of June 30, 2013, the outstanding balance of our equipment line was approximately $6.9 million and bore interest at a fixed
rate of 5.75%, and the outstanding balance of our growth capital loan was approximately $8.5 million and bore interest at a fixed rate of 8.5%. We borrowed an additional $5.0 million in August 2013 under our amended growth capital loan and security
agreement with TriplePoint Capital LLC.

We may also use a portion of the net proceeds from this offering to repay the outstanding
principal and accrued interest on our existing loan with Silicon Valley Bank. As of June 30, 2013, the outstanding balance of this loan was approximately $4.7 million and bore interest at a floating rate of 2.75% above the prime rate per annum.
We borrowed an additional $15.8 million in August 2013 under our amended loan and security agreement with Silicon Valley Bank.

In
addition, we may use a portion of the proceeds that we receive from this offering for acquisitions of complementary businesses, technologies or other assets.

The amount and timing of our actual expenditures will depend on numerous factors, including the cash used in or generated by our operations, the status of our development, the level of our sales and marketing
activities, and our technology investments and acquisitions. Our management has discretion over many of these factors. Therefore, we are unable to estimate the amount or timing of net proceeds from this offering that will be used for any of the
purposes described above. Pending the use of the proceeds from this offering as described above, we plan to invest the net proceeds in short-term, investment-grade, interest-bearing securities, such as money market accounts, certificates of deposit,
commercial paper and guaranteed obligations of the U.S. government. We cannot predict whether the invested proceeds will yield a favorable return.

We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings to fund business
development and growth, and we do not anticipate declaring or paying any cash dividends in the foreseeable future. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors
and will depend on then existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. In addition, under
the terms of our current credit facilities, we are prohibited from declaring or paying cash dividends without the prior consent of Silicon Valley Bank and TriplePoint Capital LLC.

The following table shows our cash and cash equivalents and our capitalization as of June 30, 2013 on:



an actual basis;



a pro forma basis, giving effect to (1) the filing and effectiveness of our certificate of incorporation in Delaware, which will occur in connection with
the completion of this offering, (2) the automatic conversion of all outstanding shares of preferred stock and common stock into an aggregate of 53,298,648 shares of Class B common stock immediately prior to the completion of this offering and
(3) the conversion of all warrants to purchase preferred stock and common stock into warrants to purchase 370,159 shares of Class B common stock, as if such conversions had occurred on June 30, 2013; and



a pro forma as adjusted basis, giving effect to the sale by us of 7,420,000 shares of Class A common stock in this offering, at an assumed initial public
offering price of $12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses
payable by us, and the sale of shares of Class A common stock by the selling stockholders.

The information
below is illustrative only and our capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing as well as our actual expenses. You
should read this table together with Managements Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the related notes appearing elsewhere in this prospectus.

A $1.00 increase (decrease) in the assumed initial public offering price of $12.00 per share would increase (decrease) the amount of cash and cash
equivalents, additional paid-in capital, total stockholders equity (deficit) and total capitalization by

approximately $6.9 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of one million shares in the number of shares of Class A common stock offered by us would increase (decrease) cash and cash
equivalents, additional paid-in capital, total stockholders equity (deficit) and total capitalization by approximately $11.2 million, assuming that the assumed initial public offering price remains the same, and after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable by us.

The total number of shares of
our Class A and Class B common stock reflected in the discussion and table above is based on no shares of Class A common stock and 53,298,648 shares of our Class B common stock (including preferred stock on an as converted basis)
outstanding on a pro forma basis, as of June 30, 2013, and excludes, as of June 30, 2013:



3,737,232 shares of Class B common stock issuable upon the exercise of outstanding options as of June 30, 2013 granted pursuant to our 2003 Equity Incentive
Plan at a weighted-average exercise price of $0.95 per share;



6,005,875 shares of Class B common stock issuable upon the exercise of outstanding options as of June 30, 2013 granted pursuant to our 2010 Equity Incentive
Plan at a weighted-average exercise price of $6.22 per share;



6,200,000 additional shares of Class A common stock, subject to increase on an annual basis, reserved for future issuance under our 2013 Equity Incentive
Plan, which will become effective in connection with this offering;



1,250,000 additional shares of Class A common stock, subject to increase on an annual basis, reserved for future issuance under our 2013 Employee Stock Purchase
Plan, which will become effective in connection with this offering; and



370,159 shares of Class B common stock issuable upon exercise of outstanding warrants with a weighted-average exercise price of $3.15 per share.

The total debt, capital lease obligations and preferred stock warrant liability reflected in the discussion and
table above are based on amounts outstanding at June 30, 2013 and exclude:



$10.8 million, which we borrowed on August 14, 2013 in connection with our revolving line of credit under the amended SVB Credit Agreement;



$5.0 million, which we borrowed on August 14, 2013 in connection with our term loan under the amended SVB Credit Agreement; and



$5.0 million, which we borrowed on August 19, 2013 in connection with our term loan under the amended growth capital loan and security loan agreement with
TriplePoint.

If you invest in our Class A common stock, your interest will be diluted to the extent of the difference between the initial public offering
price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. The historical net tangible book value of our common stock as of June 30, 2013
was $(20.7) million, or $(0.90) per share. Historical net tangible book value per share represents our total tangible assets less our total liabilities, divided by the number of shares of outstanding common stock.

After giving effect to the (i) automatic conversion of our outstanding preferred stock into our Class B common stock immediately prior to the
completion of this offering and (ii) receipt of the net proceeds from our sale of 7,420,000 shares of Class A common stock in this offering at an assumed initial public offering price of $12.00 per share, which is the midpoint of the
estimated offering price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of
June 30, 2013 would have been $58.8 million, or $0.97 per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $1.35 per share to existing stockholders and an immediate dilution of
$11.03 per share to new investors purchasing Class A common stock in this offering.

The following table illustrates this
dilution on a per share basis to new investors:

Assumed initial public offering price per share

$

12.00

Pro forma net tangible book value per share as of June 30, 2013

$

(0.38

)

Increase per share attributable to this offering

1.35

Pro forma net tangible book value per share, as adjusted to give effect to this offering

0.97

Dilution in pro forma net tangible book value per share to new investors in this offering

$

11.03

A $1.00 increase (decrease) in the assumed public offering price of $12.00 per share would increase
(decrease) our pro forma net tangible book value, as adjusted to give effect to this offering, by $0.11 per share and the dilution to new investors by $0.89 per share, assuming that the number of shares offered by us, as set forth on the
cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of one million shares in the number of shares of
Class A common stock offered by us would increase (decrease) the pro forma net tangible book value, as adjusted to give effect to this offering, by $0.17 per share and the dilution to new investors by $0.16 per share, assuming that the
assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated expenses payable by us.

If the underwriters exercise their option to purchase additional shares from us and the selling stockholders in full, the pro forma net tangible book value per share of our Class A and Class B common stock, as
adjusted to give effect to this offering, would be $1.15 per share, and the dilution in pro forma net tangible book value per share to investors in this offering would be $10.85 per share of Class A common stock.

The table below summarizes as of June 30, 2013, on a pro forma as adjusted basis described above, the number of shares of our common stock,
the total consideration and the average price per share (i) paid to us by existing stockholders and (ii) to be paid by new investors purchasing our Class A common stock in this offering at an assumed initial public offering price of
$12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, before

The total number of shares of our Class A and Class B common stock reflected in the discussion and
tables above is based on no shares of Class A common stock and 53,298,648 shares of our Class B common stock (including preferred stock on an as converted basis) outstanding, as of June 30, 2013, and excludes:



3,737,232 shares of Class B common stock issuable upon the exercise of outstanding options as of June 30, 2013 granted pursuant to our 2003 Equity Incentive
Plan at a weighted-average exercise price of $0.95 per share;



6,005,875 shares of Class B common stock issuable upon the exercise of outstanding options as of June 30, 2013 granted pursuant to our 2010 Equity Incentive
Plan at a weighted-average exercise price of $6.22 per share;



6,200,000 additional shares of Class A common stock, subject to increase on an annual basis, reserved for future issuance under our 2013 Equity Incentive
Plan, which will become effective in connection with this offering;



1,250,000 additional shares of Class A common stock, subject to increase on an annual basis, reserved for future issuance under our 2013 Employee Stock Purchase
Plan, which will become effective in connection with this offering; and



370,159 shares of Class B common stock issuable upon exercise of outstanding warrants with a weighted-average exercise price of $3.15 per share.

Sales by the selling stockholders in this offering will cause the number of shares held by existing stockholders
to be reduced to 53,248,648 shares, or 87.8% of the total number of shares of our Class A and Class B common stock outstanding after this offering, and will increase the number of shares held by new investors to 7,420,000 shares, or 12.2%
of the total number of shares of our Class A common stock and Class B common stock outstanding after this offering.

To the
extent that any outstanding options are exercised, new options are issued under our share-based compensation plans or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this
offering. If all outstanding options under our 2003 Equity Incentive Plan and 2010 Equity Incentive Plan as of June 30, 2013 were exercised, then our existing stockholders, including the holders of these options, would own 89.5% and our new
investors would own 10.5% of the total number of shares of our Class A and Class B common stock outstanding upon the completion of this offering. In such event, the total consideration paid by our existing stockholders, including the holders of
these options, would be approximately $117.6 million, or 56.9%, the total consideration paid by our new investors would be $89.0 million, or 43.1%, the average price per share paid by our existing stockholders would be $1.87 and the
average price per share paid by our new investors would be $12.00.

You should read the following selected consolidated financial and other data in conjunction with the section titled Managements
Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this prospectus.

We have derived the following selected consolidated statements of operations data for the years ended December 31, 2010, 2011 and 2012 and the
selected consolidated balance sheet data as of December 31, 2011 and 2012 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the selected consolidated statement of operations data for the
six months ended June 30, 2012 and June 30, 2013 and the selected consolidated balance sheet data as of June 30, 2013 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The unaudited interim
consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary
for the fair statement of our unaudited interim consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future, and the results for the six months ended June 30, 2013 are
not necessarily indicative of the results to be expected for the full year ending December 31, 2013 or any other period.

Year Ended December 31,

Six Months EndedJune 30,

2010

2011

2012

2012

2013

(unaudited)

(unaudited)

(in thousands, except per share amounts)

Consolidated Statements of Operations Data:

Revenues:

Services

$

46,385

$

71,915

$

105,693

$

47,699

$

66,744

Product

3,837

6,962

8,833

4,115

6,485

Total revenues

50,222

78,877

114,526

51,814

73,229

Cost of revenues:

Services(1)

17,915

26,475

36,215

17,119

22,098

Product

4,537

6,523

8,688

4,182

6,301

Total cost of revenues

22,452

32,998

44,903

21,301

28,399

Gross profit

27,770

45,879

69,623

30,513

44,830

Operating expenses:

Research and development(1)

7,208

12,199

24,450

11,037

16,110

Sales and marketing(1)

22,922

34,550

54,566

25,844

33,466

General and administrative(1)

4,934

12,969

24,434

12,079

17,781

Total operating expenses

35,064

59,718

103,450

48,960

67,357

Loss from operations

(7,294

)

(13,839

)

(33,827

)

(18,447

)

(22,527

)

Other income (expense), net:

Interest expense

(184

)

(158

)

(1,503

)

(230

)

(1,227

)

Other income (expense), net

172

109

32

(28

)

(247

)

Other income (expense), net

(12

)

(49

)

(1,471

)

(258

)

(1,474

)

Loss before provision (benefit) for income taxes

(7,306

)

(13,888

)

(35,298

)

(18,705

)

(24,001

)

Provision (benefit) for income taxes

1

15

92

33

(120

)

Net loss

$

(7,307

)

$

(13,903

)

$

(35,390

)

$

(18,738

)

$

(23,881

)

Net loss per common share:

Basic and diluted

($

0.35

)

($

0.64

)

($

1.58

)

($

0.84

)

($

1.05

)

Weighted-average number of shares used in computing net loss per share:

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read
in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. In addition to historical consolidated financial information, the following discussion contains forward looking statements that
reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in
this prospectus, particularly in Risk Factors. Our fiscal year end is December 31 and our fiscal quarters end on March 31, June 30, September 30, and December 31. Our fiscal years ended
December 31, 2010, 2011 and 2012 are referred to as fiscal 2010, fiscal 2011 and fiscal 2012, respectively.

Overview

We are a leading provider of software-as-a-service, or SaaS, solutions for business communications. We believe that our innovative,
cloud-based approach disrupts the large market for business communications solutions by providing flexible and cost-effective services that support distributed workforces, mobile employees and the proliferation of bring-your-own
communications devices. We enable convenient and effective communications for our customers, across all their locations, all their employees, all the time, thus enabling a more productive and dynamic workforce. RingCentral Office, our flagship
service, is a multi-user, enterprise-grade communications solution that enables our customers and their employees to communicate via voice, text and fax, on multiple devices, including smartphones, tablets, PCs and desk phones.

We founded our business in 1999 and currently offer three services: RingCentral Office, RingCentral Professional, and RingCentral Fax. Prior to
2009, substantially all of our revenues were derived from RingCentral Professional, which we previously sold as RingCentral Mobile, and, RingCentral Fax and Extreme Fax, a discontinued service. In 2009, we began selling RingCentral Office, our
current flagship service, to deliver an enterprise-grade SaaS multi-user communications solution, with advanced inbound and outbound voice, text and fax capabilities, delivered as a scalable solution.

We primarily generate revenues by selling subscriptions for our RingCentral Office, RingCentral Professional, and RingCentral Fax offerings.
RingCentral Office is offered at monthly subscription rates, varying with the specific functionalities and services and the number of users. RingCentral Office customers generally pay higher monthly subscription rates than customers of our other
service offerings. RingCentral Professional is offered at monthly subscription rates that vary based on the desired number of minutes usage and extensions allotted to the plan. RingCentral Fax is offered at monthly subscription rates that vary based
on the desired number of pages and phone numbers allotted to the plan.

Our subscription plans have historically had monthly or annual
contractual terms and over 95% of our current customers are on monthly contractual terms, although we also have subscription plans with multi-year contractual terms, generally with larger customers. We believe that this flexibility in contract
duration is important to meet the different needs of our customers. Generally, our fees for subscription plans have been billed in advance via credit card. However, as the number of RingCentral Office customers grows, we expect to bill more
customers through commercial invoices with customary payment terms and, accordingly, our levels of accounts receivable may increase. For fiscal 2010, 2011 and 2012, services revenues accounted for more than 90% of our total revenues. The remainder
of our revenues are comprised of product revenues from the sale of pre-configured office phones, which we offer as a convenience to our customers in connection with subscriptions to our services.

We make significant upfront investments to acquire customers. Until 2009, we acquired most of our customer subscriptions through e-commerce
transactions on our website driven by online marketing

channels. Beginning in 2009, in connection with our introduction of RingCentral Office, we established a direct, inside sales force. Since then, we have continued investing in our direct, inside
sales force while also developing indirect sales channels to market our brand and our service offerings. Our indirect sales channel consists of a network of over 1,000 sales agents and resellers, including AT&T, which we refer to collectively as
resellers. We intend to continue to foster this network and to expand our network with other resellers. Beginning in 2011, we also began expanding into more traditional forms of media advertising, such as radio and billboard advertising.

In the last three years, our revenue growth has primarily been driven by our flagship RingCentral Office service offering, which has resulted
in an increased number of customers, increased average subscription revenues per customer, and increased retention of our existing customer and user base. We define a customer as one individual billing relationship for the subscription
to our services, which generally correlates to one company account per customer. We define a user as one person within a customer who has been granted a subscription license to use our services, such that the number of users per customer
generally correlates closely to the number of employees within a customer account. For fiscal 2010, 2011 and 2012, and the six months ended June 30, 2013, no single customer and no single reseller accounted for more than 10% of our total
revenues, and our 10 largest non-reseller customers accounted for less than 10% of our total revenues. As of June 30, 2013, we had over 300,000 customers from industries including advertising, finance, healthcare, legal services, non-profit
organizations, real estate, retail and technology, and ranging in size from businesses with fewer than 10 users to more than 500 users. For fiscal 2012, 99% of our total revenues were generated in the U.S. and Canada, although we expect
the percentage of our total revenues derived outside of the U.S. and Canada to grow as we expand internationally.

The growth of
our business and our future success depend on many factors, including our ability to expand our customer base to medium-sized and larger customers, continue to innovate, grow revenues from our existing customer base, expand our distribution channels
and scale internationally. While these areas represent significant opportunities for us, they also pose risks and challenges that we must successfully address in order to sustain the growth of our business and improve our operating results. For
example, as a result of our efforts to expand our customer base to target medium-sized and larger businesses, we expect to incur additional research and development and support and professional services costs and may experience longer sales cycles
that may delay revenues associated with these costs. Furthermore, because we have limited experience selling to larger businesses and international customers, our investment in marketing our services to these potential customers may not be
successful, which could materially and adversely affect our results of operations and our overall ability to grow our customer base. In addition, there has been substantial litigation in the areas in which we operate regarding intellectual property
rights, including third parties claiming patent infringement such as the lawsuit that CallWave filed against us in December 2012, as further described under BusinessLegal Proceedings. We cannot assure you that we will be successful
in defending against any such claims or that we will be able to settle any ongoing or future claims or that any such settlement would be on terms that are favorable to us.

We have experienced significant growth in recent periods, with total revenues of $50.2 million, $78.9 million and $114.5 million in 2010, 2011 and 2012, respectively, generating year-over-year increases of 57% and
45%, respectively. We have continued to make significant expenditures and investments, including in research and development, brand marketing and channel development, infrastructure and operations, and incurred net losses of $7.3 million, $13.9
million and $35.4 million, in 2010, 2011 and 2012, respectively. For the six months ended June 30, 2012 and 2013, our total revenues were $51.8 million and $73.2 million, respectively, and our net losses were $18.7 million and $23.9 million,
respectively.

Our business model focuses on acquiring and retaining our customers, as well as increasing the number of users within our customer base and, in the future, encouraging our customers to purchase additional
functionalities, both of which we refer to as upselling. We evaluate the value of a customer relationship over its anticipated lifecycle. While we generally incur customer acquisition costs in advance of, or at the time of, the acquisition of a
customer, we recognize services revenues ratably over the subscription period. As a result, a customer relationship is typically not profitable at the beginning of the subscription period, even though we expect it to have value to us over the
lifetime of that customer relationship.

In connection with our acquisition of new customers, we typically incur and recognize
significant upfront costs. These costs include sales and marketing costs, including sales commission expenses associated with the acquisition of new customer contracts that we recognize fully in the period in which we execute a customer contract. We
recognize cost of services revenues, including our data center and communications costs, in the period in which they are incurred.

When
a customer renews its subscription or purchases additional services in subsequent periods, the value realized from that customer increases because we generally do not incur significant incremental acquisition costs for the renewal or expansion of
services. We also benefit from decreasing phone fulfillment costs, as well as economies of scale in our capital, operating, and other support expenditures. As we support more and larger customers with an increasing number of users over time, our
support costs per user decline due to economies of scale and increased customer familiarity with our services, as well as reduced phone fulfillment costs.

Key Business Metrics

In addition to generally accepted accounting principles, or U.S. GAAP,
financial measures such as total revenues, gross margin and cash flows from operations, we regularly review a number of key business metrics to evaluate growth trends, measure our performance, and make strategic decisions. We discuss revenues and
gross margin under Key Components of Our Results of Operations and cash flow from operations under Liquidity and Capital Resources. Other key business metrics are discussed below.

Annualized Exit Monthly Recurring Subscriptions

We believe that our Annualized Exit Monthly Recurring Subscriptions is a leading indicator of our anticipated services revenues. Our Annualized Exit Monthly Recurring Subscriptions equals our Monthly Recurring
Subscriptions multiplied by 12. Our Monthly Recurring Subscriptions equals the monthly value of all customer subscriptions in effect at the end of a given month. For example, our Monthly Recurring Subscriptions at December 31, 2012 was $10.3
million. As such, our Annualized Exit Monthly Recurring Subscriptions at December 31, 2012 were $124.2 million. Our Annualized Exit Monthly Recurring Subscriptions at December 31, 2010, 2011 and 2012 were $54.4 million, $86.1 million
and $124.2 million, respectively, and at June 30, 2012 and 2013 were $105.0 million and $147.6 million, respectively.

RingCentral Office
Annualized Exit Monthly Recurring Subscriptions

We calculate our RingCentral Office Annualized Exit Monthly Recurring
Subscriptions in the same manner as we calculate our Annualized Exit Monthly Recurring Subscriptions, except that only customer subscriptions from RingCentral Office customers are included when determining Monthly Recurring Subscriptions for the
purposes of calculating this key business metric. Our RingCentral Office Annualized Exit Monthly Recurring Subscriptions at December 31, 2010, 2011 and 2012 were $17.1 million, $37.5 million and $67.1 million, respectively, and at June 30,
2012 and 2013 were $50.4 million and $88.3 million, respectively.

We define Dollar Net Change as the quotient of (i) the difference of our Monthly Recurring Subscriptions at the end of a period
minus our Monthly Recurring Subscriptions at the beginning of a period minus our Monthly Recurring Subscriptions at the end of the period from new customers we added during the period, (ii) all divided by the number of months in the period. We
define our Average Monthly Recurring Subscriptions as the average of the Monthly Recurring Subscriptions at the beginning and end of the measurement period.

As an illustrative example, if our Monthly Recurring Subscriptions were $118 at the end of a quarterly period and $100 at the beginning of period, and $20 at the end of the period from new customers we added during
the period, then the Dollar Net Change would be equal to ($0.67), or the amount equal to the difference of $118 minus $100 minus $20, all divided by three months. Our Average Monthly Recurring Subscriptions would equal $109, or the sum of $100 plus
$118, divided by two. Our Net Monthly Subscription Dollar Retention Rate would then equal 99.4%, or approximately 99%, or one plus the quotient of the Dollar Net Change divided by the Average Monthly Recurring Subscriptions.

Our key business metrics at December 31, 2010, 2011 and 2012, and at June 30, 2012 and 2013 were as follows (dollars in millions):

Metric

As of December 31,

As of June 30,

2010

2011

2012

2012

2013

Net Monthly Subscription Dollar Retention Rate

~98

%

~99

%

~99

%

~98

%

~99

%

Annualized Exit Monthly Recurring Subscriptions

$

54.4

$

86.1

$

124.2

$

105.0

$

147.6

RingCentral Office Annualized Exit Monthly Recurring Subscriptions

$

17.1

$

37.5

$

67.1

$

50.4

$

88.3

Key Components of Our Results of Operations

Revenues

Our revenues consist of services revenues and product revenues. Our
services revenues include all fees billed in connection with subscriptions to our RingCentral Office, RingCentral Professional, and RingCentral Fax services. These fees include recurring fixed plan subscription fees, variable usage-based fees for
usage in excess of plan limits, recurring administrative cost recovery fees, and one-time fees. We provide our services to our customers pursuant to contractual arrangements that range in duration from one month to three years. We provide our
services to our customers pursuant to either click through online agreements for service terms up to one year or written agreements when the arrangement is expected to be one year or longer. Our multi-year engagements do not typically
exceed three years. We offer our services based on the functionalities and services selected by a customer, and generally our service arrangements automatically renew for some additional period at the end of the initial subscription term. We believe
that this flexibility in contract duration is important to meet the different needs of our customers.

We generally bill our
service fees in advance. We recognize services revenues over the term of the subscription, except for one-time fees, which we recognize ratably on a straight-line basis over the

period of the estimated average customer life and variable usage-based fees, which we recognize over the estimated usage period in a manner that approximates actual usage. Amounts billed in
excess of revenues recognized for the period are reported as deferred revenue on our consolidated balance sheet.

Our product
revenues consist primarily of the sale of pre-configured office phones used in connection with our services and include shipping and handling fees. Product revenues are billed at the time the order is received and recognized when the product has
been delivered to the customer.

We also generate services revenues and product revenues through sales of our services and products by
resellers. When we assume a majority of the business risks associated with performance of the contractual obligations, we record the revenues on a gross basis and amounts retained by our resellers are recorded as sales and marketing expenses. Our
assumption of such business risks is evidenced when, among other things, we take responsibility for delivery of the service or product, establish pricing of the arrangement, assume credit and inventory risk, and are the primary obligor in the
arrangement. When a reseller assumes the majority of the business risks associated with the performance of the contractual obligations, we record the associated revenues at the net amount remitted to us by the reseller. Revenues from resellers have
predominantly been recorded on a gross basis for all periods presented.

Cost of Revenues and Gross Margin

Our cost of services revenues primarily consists of fees that we pay to third-party telecommunications providers, network operations, costs to build
out and maintain data centers, including co-location fees for the right to place our servers in data centers owned by third parties, depreciation of the servers and equipment, along with related utilities and maintenance costs, personnel costs
associated with customer care and support of the functionality of our platform and data center operations, including share-based compensation expenses, and allocated costs of facilities and information technology.

Services gross margin, which we define as services revenues minus cost of services revenues expressed as a percentage of services revenues, can
fluctuate based on a number of factors, including the costs we pay to third-party telecommunications providers, the timing of capital expenditures and related depreciation charges and changes in headcount. We expect to continue investing in our
network infrastructure and customer support function to maintain high availability, quality of service, and security. As our business grows, we expect to continue to reduce the percentage of our services revenues that we spend on telecommunications
origination and termination, driven by increased purchasing leverage and from our deployment of hardware to carry our own telecommunications traffic in several regional markets. We also expect to realize economies of scale in network infrastructure,
personnel, and customer support. We expect our services gross margin to increase modestly over time, although it may fluctuate from period to period depending on all of these factors.

Cost of product revenues is comprised primarily of the cost associated with purchased phones, as well as personnel costs for employees and
contractors, and allocated costs of facilities and information technology related to the procurement, management, and shipment of phones, including share-based compensation expenses.

We sell our products as a convenience to our customers when they subscribe to our services. We price our products at approximately our cost and
occasionally offer additional product discounts as an incentive for customers to subscribe to our services. We therefore expect our product gross margin, which we define as product revenues minus cost of product revenues expressed as a percentage of
product revenues, to remain negligible to negative for the foreseeable future. The discounts that we offer on sales of our products are partially allocated to services revenues when sold in multiple-deliverable arrangements.

We classify our operating expenses as research and development, sales and marketing and general and administrative expenses.

Our research and development efforts are focused on developing new and expanded features for our services and improvements to our platform and backend architecture. Research and development expenses consist
primarily of personnel costs for employees and contractors, including share-based compensation expenses, and allocated costs of facilities and information technology, software tools, and product certification. We expense research and development
costs as incurred, except for certain internal-use software development costs that we capitalize. We believe that continued investment in our services is important for our future growth, and we expect our research and development expenses to
continue to increase in absolute dollars for the foreseeable future, although these expenses may fluctuate as a percentage of our total revenues from period to period depending on the timing of these expenses.

Sales and marketing expenses are the largest component of our operating expenses and consist primarily of personnel costs for employees and
contractors directly associated with our sales and marketing activities, including share-based compensation expenses, Internet advertising fees, radio and billboard advertising, public relations, commissions paid to resellers and other third
parties, trade shows, travel expenses, credit card fees, marketing and promotional activities and allocated costs of facilities and information technology. We expect our sales and marketing expenses to continue to increase in absolute dollars for
the foreseeable future as we expand our sales and marketing efforts domestically and internationally and continue to build our brand, although these expenses may fluctuate as a percentage of our total revenues from period to period depending on the
timing of these expenses.

General and administrative expenses consist primarily of personnel costs, including share-based compensation
expenses, for employees and contractors engaged in back-office and administrative activities to support the day-to-day operations of our business. Other significant components of general and administrative expenses include professional service fees,
allocated costs of facilities and information technology, cost of compliance with certain government imposed taxes, and the costs of legal matters and loss contingencies. Following the completion of this offering, we expect to incur additional
expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the
rules and regulations of the SEC, and increased expenses for insurance, investor relations, and professional services. We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future, although
these expenses may fluctuate as a percentage of our total revenues from period to period, depending on the timing of these expenses.

The following table shows our results of operations in dollars and as a percentage of our total revenues. The historical results presented below are not necessarily indicative of the results that may be expected
for any future period (in thousands):

Comparison of the Six Months Ended June 30, 2012 and June 30, 2013 (dollars in thousands):

Revenues

Six Months Ended June 30,

2012

% ofRevenues

2013

% ofRevenues

Increase

% Increase

Revenues:

Services

$

47,699

92

%

$

66,744

91

%

$

19,045

40

%

Product

4,115

8

%

6,485

9

%

2,370

58

%

Total revenues

$

51,814

100

%

$

73,229

100

%

$

21,415

41

%

Services revenues increased by $19.0 million, or 40%, for the six months ended June 30, 2013 compared to
the six months ended June 30, 2012, primarily due to the acquisition of new customers and an increase in the number of users within our existing customer base. In addition, our services revenues mix contained a higher proportion of RingCentral
Office customers for the six months ended June 30, 2013. While the acquisition of new customers and the increase in the number of users within our existing customer base were the primary reasons for the increase, the trends for these factors
have varied from period to period as some customers made a small initial user subscription followed by a larger additional user subscription, while other customers made a large initial user subscription

followed by a smaller additional user subscription. In addition, the period of time between a customers initial subscription and the purchase of additional subscriptions also varied
significantly, ranging from one month to a few years. The overall growth in our customer base was primarily driven by increased brand awareness of our services, driven by a 29% increase in our sales and marketing expenditures from period to period,
which include advertising and sales personnel expenditures that we believe helped to facilitate increased customer acceptance of our services.

Product revenues increased by $2.4 million, or 58%, for the six months ended June 30, 2013 compared to the six months ended June 30, 2012, primarily due to increased phone sales driven by the growth of new
customers to RingCentral Office, which was partially offset by a decline in average selling price per phone.

Cost of Revenues and Gross Margin

Six Months Ended June 30,

2012

% ofRevenues

2013

% ofRevenues

Increase

% Increase

Cost of revenues:

Services

$

17,119

33

%

$

22,098

30

%

$

4,979

29

%

Product

4,182

8

%

6,301

9

%

2,119

51

%

Total cost of revenues

$

21,301

41

%

28,399

39

%

7,098

33

%

Cost of services revenues increased by $5.0 million, or 29%, for the six months ended June 30, 2013 compared
to the six months ended June 30, 2012, primarily due to an increase in personnel costs for employees and contractors of $1.8 million, depreciation and amortization expense of $1.3 million and third-party service provider fees of
$1.3 million. The increases in headcount and other expense categories described above were driven primarily by investments in our infrastructure and capacity to improve the availability of our service offerings, while also supporting the growth
in new customers and increased usage of our services by our customer base.

Cost of product revenues increased by $2.1 million, or
51%, for the six months ended June 30, 2013 compared to the six months ended June 30, 2012 due to an increase in phone sales, which was primarily driven by the growth in new RingCentral Office customers.

Overall gross margin increased from 59% to 61% and services gross margin increased from 64% to 67% for the six months ended June 30, 2013 compared
to the six months ended June 30, 2012, primarily due to reduction in per usage fees that we paid to third-party telecommunications service providers as a result of increased call traffic, partially offset by increased phone sales. As a percentage of
our services revenues, fees paid to third-party telecommunications service providers decreased from 17% for the six months ended June 30, 2012 to 14% for the six months ended June 30, 2013. Phone sales increased by $2.4 million, or 58%,
from the six months ended June 30, 2012 to the six months ended June 30, 2013.

Research and development expenses increased by $5.1 million, or 46%, for the six months ended
June 30, 2013 compared to the six months ended June 30, 2012, primarily due to an increase in personnel costs for employees and contractors of $3.3 million, including share-based compensation expenses of $0.2 million. The higher personnel
costs were primarily due to a 20% increase in research and development headcount. The increase in research and development headcount was in support of the development of additional software development projects for our cloud-based and desktop
applications. The increase in other research and development related activities related primarily to an increase in third-party telecommunications fees of $0.4 million and depreciation of $0.4 million. As a percentage of our total revenues, research
and development expenses increased slightly from 21% for the six months ended June 30, 2012 to 22% for the six months ended June 30, 2013.

Sales and marketing expenses increased by $7.6 million, or 29%, for the six months ended June 30, 2013 compared to the six months ended June 30, 2012, primarily due to an increase in personnel costs for
employees and contractors of $3.5 million and other sales and marketing related activities. The higher personnel costs were primarily due to a 40% increase in sales and marketing headcount. The increase in other sales and marketing related
activities relate primarily to an increase in Internet advertising costs of $0.8 million and third-party sales commissions of $1.8 million. The increases in sales and marketing headcount and other expense categories described above supported our
growth strategy to acquire new customers and establish brand recognition to achieve greater penetration into the North America market. As a percentage of our total revenues, sales and marketing expenses decreased from 50% for the six months ended
June 30, 2012 to 46% for the six months ended June 30, 2013.

General and administrative expenses increased by $5.7 million or 47%, for
the six months ended June 30, 2013 compared to the six months ended June 30, 2012, primarily due to increases in personnel costs for employees and contractors of $3.5 million, including share-based compensation expenses of $0.8 million, and loss
contingencies of $3.4 million. These increases were offset by a decrease in taxes on revenue-producing transactions of $1.0 million. The increases in personnel costs were due to an 11% increase in general and administrative headcount. The increases
in headcount supported the increased infrastructure required to support the growth in our business and to expand our financial reporting and internal control capabilities. The increased loss contingencies were primarily due to a loss contingency
recorded with respect to an outstanding litigation matter in the three months ended June 30, 2013. As a percentage of our total revenues, general and administrative expenses increased from 23% for the six months ended June 30, 2012 to 24% for the
six months ended June 30, 2013.

Other Income and Expense, Net

Six Months Ended June 30,

2012

% ofRevenues

2013

% ofRevenues

Increase/(Decrease)

% Increase/(Decrease)

Other income (expense), net:

Interest expense

$

(230

)

(1

)%

$

(1,227

)

(2

)%

(997

)

433

%

Other Income (expense), net

$

(28

)

0

%

(247

)

0

%

(219

)

782

%

Interest expense increased by $1.0 million for the six months ended June 30, 2013 compared to the six months
ended June 30, 2012, primarily due to interest accrued on a larger outstanding principal balance under our various credit facilities.

Comparison of the Years Ended December 31, 2011 and 2012 (dollars in thousands):

Revenues

Year Ended December 31,

2011

% ofRevenues

2012

% ofRevenues

Increase

% Increase

Revenues:

Services

$

71,915

91

%

$

105,693

92

%

$

33,778

47

%

Product

6,962

9

%

8,833

8

%

1,871

27

%

Total revenues

$

78,877

100

%

$

114,526

100

%

$

35,649

45

%

Services revenues increased by $33.8 million, or 47%, for fiscal 2012 compared to fiscal 2011, primarily due to
the acquisition of new customers and an increase in the number of users within our existing customer base, and to a lesser extent, the growth in our overall installed base for RingCentral Office. While the acquisition of new customers and the
increase in the number of users within our existing customer base were the primary reasons for the increase, the trends for these factors have varied from period to period as some customers made a small initial user subscription followed by a larger
additional user subscription, while other customers made a large initial user subscription followed by a smaller additional user subscription. In addition, the period of time between a customers initial subscription and the purchase of
additional subscriptions also varied significantly, ranging from one month to a few years. The overall growth in our customer base was primarily driven by increased brand awareness of our services, driven by a 58% increase in our sales and marketing
expenditures from period to period, which include advertising and sales personnel expenditures that we believe helped to facilitate increased customer acceptance of our services.

Product revenues increased by $1.9 million, or 27%, for fiscal 2012 compared to fiscal 2011, primarily due to phone sales driven by the growth in
new customers to RingCentral Office.

Cost of Revenues and Gross Margin

Year Ended December 31,

2011

% ofRevenues

2012

% ofRevenues

Increase

% Increase

Cost of revenues:

Services

$

26,475

34

%

$

36,215

32

%

$

9,740

37

%

Product

6,523

8

%

8,688

7

%

2,165

33

%

Total cost of revenues

$

32,998

42

%

$

44,903

39

%

$

11,905

36

%

Cost of services revenues increased by $9.7 million, or 37%, for fiscal 2012 compared to fiscal 2011, primarily due
to an increase in personnel costs for employees and contractors of $3.9 million, depreciation and amortization expense of $1.7 million, third-party telecommunications service providers and network fees of $4.2 million, and software tools
expense of $0.4 million. The increases in headcount and other expense categories described above were primarily driven by investments in our infrastructure and capacity to improve the availability of our service offerings, while also supporting
the growth in new customers.

Cost of product revenues increased by $2.2 million, or 33%, for fiscal 2012 compared to fiscal 2011, due
to an increase in phone sales, which was primarily driven by growth in new customers to RingCentral Office.

Overall gross margin increased from 58% to 61% and services gross margin increased from 63% to 66% for
fiscal 2012 compared to fiscal 2011, primarily due to reduction in per usage fees that we paid to third-party telecommunications service providers as a result of increased call traffic, partially offset by increased phone sales. As a percentage of
services revenues, fees paid to third-party telecommunications service providers decreased from 18% for fiscal 2011 to 16% for fiscal 2012. Phone sales increased by $1.9 million, or 27%, from fiscal 2011 to fiscal 2012.

Operating Expenses

Year Ended December 31,

2011

% ofRevenues

2012

% ofRevenues

Increase

% Increase

Operating expenses:

Research and development

$

12,199

16

%

$

24,450

22

%

$

12,251

100

%

Sales and marketing

34,550

44

%

54,566

48

%

20,016

58

%

General and administrative

12,969

16

%

24,434

21

%

11,465

88

%

Total operating expenses

$

59,718

76

%

$

103,450

91

%

$

43,732

73

%

Research and development expenses increased by $12.3 million, or 100%, for fiscal 2012 compared to fiscal 2011,
primarily due to an increase in personnel costs for employees and contractors of $11.2 million, including an increase in share-based compensation expense of $0.6 million. The increase in personnel costs was primarily due to a 114% increase in
research and development headcount. The increases in research and development headcount supported additional software applications development projects, improving the design of our user interface, and building redundancy into our databases to
improve availability of our service offerings. As a percentage of our total revenues, research and development expenses increased from 16% for fiscal 2011 to 22% for fiscal 2012.

Sales and marketing expenses increased by $20.0 million, or 58%, for fiscal 2012 compared to fiscal 2011, primarily due to an increase in sales and
marketing personnel costs for employees and contractors of $7.1 million, including an increase in share-based compensation of $0.4 million, and other sales and marketing related activities. The increase in sales and marketing personnel costs was
primarily due to a 62% increase in sales and marketing headcount. Internet advertising increased by $4.8 million and other marketing related expenses, including third party commissions, increased by $5.9 million. The increases in headcount and other
expense categories described above supported our growth strategy to acquire new customers, increase the number of users within our existing customer base and establish brand recognition to achieve greater penetration into the North American market.
As a percentage of our total revenues, sales and marketing expenses increased from 44% for fiscal 2011 to 48% for fiscal 2012.

General
and administrative expenses increased by $11.5 million, or 88%, for fiscal 2012 compared to fiscal 2011, primarily due to an increase in personnel costs for general and administrative employees and contractors of $6.5 million, including an increase
in share-based compensation of $0.9 million, and fees for professional services of $1.2 million. The increase in general and administrative personnel costs was primarily due to a 65% increase in general and administrative headcount. Outside
professional fees related primarily to legal and accounting costs. In addition, we incurred legal settlement costs of $1.1 million and the cost of certain taxes on revenue-producing transactions that exceeded amounts collected from customers of $1.1
million in 2012. As a percentage of our total revenues, general and administrative expenses increased from 16% for fiscal 2011 to 21% for fiscal 2012.

Interest expense increased by $1.3 million for fiscal 2012 compared to fiscal 2011, primarily due to higher levels
of debt outstanding at December 31, 2012 as compared to December 31, 2011. At December 31, 2011, there was $0.6 million of debt outstanding. At December 31, 2012, there was $20.1 million of debt outstanding.

Comparison of the Years Ended December 31, 2010 and 2011 (dollars in thousands):

Revenues

Year Ended December 31,

2010

% ofRevenues

2011

% ofRevenues

Increase

% Increase

Revenues:

Services

$

46,385

92

%

$

71,915

91

%

$

25,530

55

%

Product

3,837

8

%

6,962

9

%

3,125

81

%

Total revenues

$

50,222

100

%

$

78,877

100

%

$

28,655

57

%

Services revenues increased by $25.5 million, or 55%, for fiscal 2011 compared to fiscal 2010, primarily due to
growth in the total number of customers and an increase in the number of users per customer. To a lesser extent, the growth in services revenues was attributable to the growth in new RingCentral Office customers. While the acquisition of new
customers and the increase in the number of users within our existing customer base were the primary reasons for the increase, the trends for these factors have varied from period to period as some customers made a small initial user subscription
followed by a larger additional user subscription, while other customers made a large initial user subscription followed by a smaller additional user subscription. In addition, the period of time between a customers initial subscription and
the purchase of additional subscriptions also varied significantly, ranging from one month to a few years. The overall growth in our customer base was primarily driven by increased brand awareness of our services, driven by a 51% increase in our
sales and marketing expenditures from period to period, which include advertising and sales personnel expenditures that we believe helped to facilitate increased customer acceptance of our services.

Product revenues increased by $3.1 million, or 81%, for fiscal 2011 compared to fiscal 2010, primarily due to the increase in phone shipments
driven by growth in RingCentral Office subscriptions.

Cost of services revenues increased by $8.6 million, or 48%, for fiscal 2011 compared to fiscal 2010,
primarily due to fees paid to third-party telecommunications service providers and network fees of $3.2 million and an increase in personnel costs for employees and contractors of $5.1 million. The increases in headcount and other expense
categories described above were primarily driven by investments in our infrastructure and capacity to improve the availability of our service offerings, while also supporting the growth in new customers.

Cost of product revenues increased by $2.0 million, or 44%, for fiscal 2011 compared to fiscal 2010, due to an increase in phone sales, which was
primarily driven by growth in new RingCentral Office customers.

Overall gross margin increased from 55% to 58% and services gross
margin increased from 61% to 63% for fiscal 2011 compared to fiscal 2010, primarily due to reduction in per usage fees that we paid to third-party telecommunications service providers as a result of increased call traffic, partially offset by
increased phone sales. As a percentage of services revenues, fees paid to third-party telecommunications service providers decreased from 21% for fiscal 2010 to 18% for fiscal 2011. Phone sales increased by $3.1 million, or 81%, from fiscal
2010 to fiscal 2011.

Operating Expenses

Year Ended December 31,

2010

% ofRevenues

2011

% ofRevenues

Increase

% Increase

Operating expenses:

Research and development

$

7,208

14

%

$

12,199

16

%

$

4,991

69

%

Sales and marketing

22,922

46

%

34,550

44

%

11,628

51

%

General and administrative

4,934

10

%

12,969

16

%

8,035

163

%

Total operating expenses

$

35,064

70

%

$

59,718

76

%

$

24,654

70

%

Research and development expenses increased by $5.0 million, or 69%, for fiscal 2011 compared to fiscal 2010,
primarily due to an increase in personnel costs for employees and contractors of $5.2 million, including share-based compensation of $0.2 million. The increase in personnel costs was primarily due to a 79% increase in research and development
headcount. The increases in headcount supported additional software applications development projects, improving the design of a new user interface, and building redundancy into our databases to improve the availability of our service offerings. As
a percentage of our total revenues, research and development expenses increased from 14% for the fiscal 2010 to 16% for fiscal 2011.

Sales and marketing expenses increased by $11.6 million, or 51%, for fiscal 2011 compared to fiscal 2010, primarily due to an increase in sales and
marketing personnel costs for employees and contractors of $4.8 million, and other sales and marketing related activities. The increase in sales and marketing personnel costs were primarily due to a 60% increase in sales and marketing
headcount. The increase in other sales and marketing related activities resulted from an increase in Internet advertising of $3.7 million. The increases in headcount and other expense categories described above supported our growth strategy to
acquire new customers and establish brand recognition to achieve greater penetration into the North America market. As a percentage of our total revenues, sales and marketing expenses decreased from 46% for fiscal 2010 to 44% for fiscal 2011.

General and administrative expenses increased by $8.0 million, or 163%, for fiscal 2011 compared to fiscal 2010, primarily due to an
increase in personnel costs for employees and contractors of $3.5 million, including share-based compensation of $0.2 million and fees for professional services,

including accounting, tax and other professional fees of $2.9 million and loss contingencies for sales and use tax of $2.9 million. The increase in general and administrative personnel costs
were primarily due to 108% increase in general and administrative headcount. Outside professional fees related primarily to legal and accounting costs to support the growth in our business. As a percentage of our total revenues, general and
administrative expenses increased from 10% for fiscal 2010 to 16% for fiscal 2011.

Quarterly Results of Operations

The following tables set forth unaudited quarterly consolidated statements of operations data for each quarter of fiscal 2012 and the first two
quarters of fiscal 2013. We have prepared the statement of operations for each of these quarters on the same basis as the audited consolidated financial statements included elsewhere in this prospectus, and, in our opinion, it includes all
adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods. This information should be read in conjunction with our audited consolidated financial statements and
related notes included elsewhere in this prospectus. These quarterly results of operations are not necessarily indicative of our results of operations for any future period.